Apparently, if you feel like there’s a “secret market” out there where the people with “real money” are making money hand over fist with little to no effort, and you’re afraid that you’re missing out, then you’re the prime candidate for any number of expensive trading services.
This latest ad is not too different from the forex trading education kit offered by the “Mac X.” teaser that has been around for ages (I wrote about it last week). It really looks like this new piece was either written by the same copywriter, or at least that this one borrowed from many of the successful themes that roped so many people into buying Mac X’s product.
The story is that a former trader in this “millionaire’s market” — which is revealed about halfway through the letter to be commodities trading — decided to get out of the business with his “secrets” and use them to make himself rich and to help small investors get into the game.
He also uses the same “secret” selling points — he paints a picture of a cabal of big banks and traders that runs the futures market, and tries to give the impression that these big guys would be upset that he’s sharing such valuable secrets with you. Hopefully, even if you’re at all intrigued by this teaser ad you’ll be able to step back and realize that this is, well, hogwash.
Here’s an excerpt:
“First, you won’t hear about the “Millionaire’s Market” on the evening news. The operation is hush-hush. And obviously, the millionaires want to keep it that way.
“Next, only the elite can join. They charge outrageous membership fees to join the “Millionaire’s Market.” At least a million bucks.”
I already used “hogwash” … so let’s call this one, “malarkey.”
This must be referring to the cost to get a seat on one of the major futures exchanges, like the CME/CBOT. That’s sort of like saying that you can’t buy or sell stocks without buying a seat on the New York Stock Exchange — individuals have always been able to trade in futures if they wanted to do so, though certainly commission costs and access are much easier for low-net-worth individuals now than they used to be. And I’d bet that nearly all the traders, brokers, and exchange seat holders want more traders, not less — volume is what provides liquidity and makes trading work better.
How many stock brokers do you know who are trying to make sure people don’t do as much stock trading, or trying to keep people out of the stock market?
More for you:
“And they use the mainstream media’s “know-it-all analysts” to convince you that the stock market is the place to be… all just to divert your attention away from them while they trade like bandits inside their secret Millionaire’s Market…
“Today alone, they’ve completed more than 1,115,153 deals. Yesterday, they closed over 1,045,456 trades… and the day before, they made 1,305,567 deals…
“My point is that over a million of these transactions occur each and every day. And they’ve run this underground Millionaire’s Market since 1872.”
All true, but certainly not news if you read anything about the commodities or other futures markets. 1872 was the year that a bunch of dairy merchants started the New York Mercantile Exchange in order to bring some price stability to their market — that’s now known as NYMEX and is primarily a metals and energy exchange, though it’s being bought by the CME Groiup (Chicago Mercantile Exchange and Chicago Board of Trade), which does handle virtually all kinds of futures. Not sure why the government continues to allow the monopolization of these exchanges, but that has certainly been the trend (I do own shares of CME Group, for full disclosure).
A little more, in case you’re not drooling with greed yet:
“Think they want to give these things up to you? NO WAY! They want it all for themselves. And the more people who know about their market the more competition they have…
“To me, that just doesn’t seem fair… So today, I’ll throw the doors wide open for you. I want to give you a “guest pass” that allows access to the opportunities inside the Millionaire’s Market. You can think of the guest pass as your revenge against them for trying to shut off access to the hardworking, blue-collar Joe…
“When you use your guest pass to get in on the profit potential of the Millionaire’s Market, you’ll have the chance to make huge sums of income — as much as $810 per week — from the world’s hottest and most secretive market.”
I don’t know how they come to these kinds of numbers when they put together this type of ad letter — that $810 per week, which is of course meaningless unless you know how much money you invested/traded or put at risk to get that return, works out to just over $42,000 a year. That’s awfully close to the average household income in the US (probably just under $50,000 this year, I haven’t checked), but it seems an oddly low number to list as the “as much as” maximum income. The author claims to have made $100,000 a year at this for many years and, as is apparently required by the copywriter’s code, also provides some testimonials from subscribers who have made impressive sounding sums, teasing potential income of $70,000 a year from this “millionaire’s market.”
There are a few pages of this kind of sell language — trying to convince you that commodities futures trading is a top secret way to safely make money, and that the millionaires have been trading on and dominating this market for over a century. I suppose that might be true, depending on your perspective, but the key word that keeps coming up for me is “safe.”
He tells a little story about how he got started after he left the employ of one of the floor traders:
“I Realized That After I Quit the Secret Millionaire’s Market, the System Didn’t Shut Me out. . . Now You Have a Chance to “Hack” Into It With the “Guest Pass” I’ll Give You Today!
“To be honest, I didn’t know if it would work. But my access to this market wasn’t shut off when I left.
“When I logged onto my personal trading account and tried to tag along on one of the Millionaire’s Market trades, I fully expected to be shut out. Then the transaction went through, and my pulse started to beat faster and faster. It wasn’t a big victory — I withdrew only $650…”
Of course, anyone (well, almost anyone) can open their own trading account … and can watch the movement of trades to some degree. With this paragraph he makes sure that you know he’s talking about the kinds of trades that are conceivable for the average person, making “only $650.” And he also makes it seem like it was just a glitch in the system that he was able to keep trading after he stopped working for the big guys … which, of course, is balderdash.
I’m running out of those words. Balderdash, malarkey, hogwash … time to pull out the thesaurus.
He does say that his “guest pass” is, of course, not really a secret pass into a closed market, but it’s just his term for his research service — which he calls the Resource Trader Alert. He doesn’t exactly shout it from the rooftops, however.
The history of the service’s recommendations is described as very successful, trading futures options for huge gains over the past few years:
“For the past 3 1/2 years, my Resource Trader Alert system has helped me cherry-pick 106 Millionaire’s Market recommendations for readers.
Eighty-eight recommendations were winners.”
That sounds really great, of course — but remember, we’re talking about what happens to have been 3-1/2 years of incredible bull markets in almost every heavily-traded commodity … gold, oil, grains, silver, they have almost all been great performers for most of that time. There has been some volatility, of course, and plenty of exceptions, but many of those commodities have 3 year charts that look like straight lines from the bottom left to the upper right, with a steeper curve really starting last fall.
I have no idea how successful this trader really is, or how his service will perform in the years to come, but bullish commodities investors over the past 3-1/2 years almost couldn’t help but have hugely successful track records at this point … if commodities collapse, how many of them are going to get you out before that happens?
I imagine that there were probably plenty of teaser letters going around in February of 2000 that claimed hugely successful records based on making 80% correct calls on tech stocks for the prior three years. That’s not to say that commodities are on a path to crash like the Nasdaq did starting in March of that year, since clearly there are very different fundamentals underlying the commodities markets — my point is just that the market has been remarkable and that someone’s success during a remarkable market move shouldn’t necessarily be enough of a reason to buy their advice — just like, when you’re investing in a mutual fund, you want to see how the manager has done during both bull and bear markets.
Let’s just look at the use of that word, “safely” some more:
“But what about today’s unstable economic conditions? Do they play a part?
“Not at all.
“You won’t be playing stocks, remember? This gives you a chance to SAFELY make money, no matter what the stock market does…”
So apparently, the fact that you’re not in stocks automatically means it’s safe?
“And my Resource Trader Alert system will show you how to safely “withdraw” money from only the VERY best transactions… the ones that could easily pay your monthly bills… and leave you some “extra” cash to burn.”
“That’s exactly what my Resource Trader Alert system is designed to do — safely provide you guest access to the Millionaire’s Market, where you’ll have a chance to make as much as $2,000–10,000 per month, depending on your initial stake.”
There’s more, but essentially I read this as a claim that the trading profits in commodities — he mentions trades that he has done in sugar, heating oil calls, coffee calls, and cocoa calls — will certainly and safely continue, particularly because none of his examples that I noticed were for bearish bets on the market (put options, versus call options, or short bets on futures). In his words, “The bottom line is that this profit parade won’t end anytime soon.”
He closes the “safety” description with this to seal the deal:
“Answer: I’m not going to lie. All investments involve risk. And to tag along with the Millionaire’s Market transactions, you’ll have to fork over the cash it takes to get in on the deal.
“If you’re not willing to take on a TINY amount of risk, you’d better stop right here. The Millionaire’s Market isn’t for you. You’d be better off sticking your money into a savings account that’s guaranteed to make you 4% per year…
“But if you’re willing to assume a small amount of risk in return for a chance to generate profits from the Millionaire’s Market, this is for you.
“On top of that, remember that I’ve been perfecting my Resource Trader Alert system for 20 years. It allows me to identify only the safest opportunities in the Millionaire’s Market.”
I hope that makes all of you at least a little bit nervous. I can’t tell you whether the Resource Trader Alert is worth $3,000 a year, or if Kevin Kerr, who edits it, is a great trader or an honorable guy — maybe all of the above are true. I can only say that I get very nervous when someone tries this hard to lowball the amount of risk a trading system requires.
Here’s what I think: If you want to get involved in futures options trading, it would be best to learn the basics of the trade before you pay someone to tell you how to do it. That way, you can go in with your eyes open and know when you’re being given solid advice and when you’re being snowballed.
And keep in mind that this is just my opinion — your friend the Gumshoe has only a basic understanding of the futures markets, and has never traded directly in those markets.
Most of the people who provide this kind of basic education for free also have a dog in the fight — they’re the brokers or advisers or exchanges who would like to have more traders, but they are not specifically recommending a particular strategy, and many of them seem to give good overviews of the market — you might, if you’re interested, start with explanations of what futures and futures options are (not too different from stocks and stock options, though with much higher leverage) and understand the kinds of costs and contracts and commissions that you’ll pay. Decent places to go for that information are Lind-Waldock’s education website (this is a broker — don’t know if they’re any good as brokers, but they do have good, clear education materials), or you can get the free futures and options manual from CME.
I know there are several folks who trade futures and futures options among the multitudes of Gumshoedom, perhaps they’ll throw in some opinions for you, too — just because something is a bit foreign for most individual investors doesn’t mean it’s a guaranteed winner or a guaranteed loser, but every trade on these exchanges has both a winner and a loser (at least for the short term plays like most of the options trades this service takes credit for) … and, in my opinion, “safe” is a dangerous word to throw around for any investment.