“Double your money … Guaranteed” Access Group

By Travis Johnson, Stock Gumshoe, April 8, 2009

This is an ad that probably many of you have already seen, from Marc Lichtenfeld for his Access Group newsletter. And yes, like so many ads do, they’re guaranteeing that you’ll double your money if you invest in this idea.

Which gives me a chance for a quick little digression before we dig into the meat of this one: What does “guaranteed” mean? For most newsletters it’s just an easy marketing promise, one that they’ll make for any stock or investment idea — if it doesn’t work out the way they predict, they’ll give you your money back.

But of course, investment newsletters are not really like most other products — if you buy a guaranteed toaster and it burns your toast, you’ll be happy to get your money back for the toaster, and it’s unlikely that you’ll be upset about losing those two pieces of bread. (If a toaster goes haywire and burns down your house, you’ll have to take it up with the lawyers).

Stock tips and investment ideas are another matter entirely — many newsletters “guarantee” their product, or will offer you money back or partial refunds if you’re every unhappy with them, but they guarantee only the toaster, not the toast — and in this case, the toast is probably a much bigger investment than the toaster. You might spend a few hundred or a thousand dollars for an investment newsletter, but you might invest perhaps $10,000 in just one idea (some a lot less, of course, some much more). The performance of that investment is never guaranteed by anyone — the only guarantee is that if you want your subscription money back, they’ll give it to you.

In this case Access Group membership is currently “on sale” for $1,750, on the pricey side for heavily advertised newsletters, but far from the most expensive (no word this time about the membership being limited to 475 people, which is how they pushed it a year ago at $2,750).

So if you invest $10,000 in this stock and it flops miserably and you lose $6,000, just for an example, the best you’ll get from the newsletter publisher is your $1,750 back. In their words, “Through this offer only, you can see all of our research right up until the FDA’s announcement risk free. And if the little company I’ve been telling you about isn’t trading a $8 per share anytime between now and a week following the news of the FDA approval, you can request and receive a full refund of any amount you’ve paid towards your subscription.”

That’s what a guarantee usually means in this business — and, to be fair, many newsletters offer no guarantee at all, so it is admirable when they do so, and when they back it up without putting up a fight, as most of the big publishers reportedly do. Just wanted to take a moment to hammer that point home, since people often ask me what exactly a “guarantee” means in a newsletter ad.

So … to the teaser, shall we?

Lichtenfeld is pushing a stock that we’ve looked at several times before in this space, with roughly the same kinds of promises attached to it — the ad is for a medical device stock, I’ll let his words explain it:

“…a medical device company that recently doubled in price for us – and continues to be one of the best money making opportunities I’ve seen in my 13 years of researching up-and-coming companies with breakthrough products.

“The company just aced its Phase III trial results, just as we predicted it would. And it’s now awaiting final FDA approval for the go-ahead to market a medical device that could revolutionize the way one of the deadliest types of cancer is detected.

“Once that approval comes, we expect this stock to double again within days of the announcement… and keep climbing from there as the company rolls out this innovative (and profitable) device to eager doctors throughout the country.”

So … we won’t push through all the folderol this time, I’ll just tell you that, yes, he is still promoting …

Electro-Optical Sciences (MELA)

… as his best money making opportunity.

There’s even the same valuation argument in the ad as we saw about a year ago from Lichtenfeld — and he still paints a picture of a possible move in the stock from $4 to $196. To see how that works, and understand the potential, let’s look at the company quickly:

Electro-Optical Sciences is a medical device company — they are developing a handheld tool that scans skin lesions and moles to help screen for melanoma, the deadly skin cancer. Essentially, this machine looks like an overgrown hair dryer, and you hold it up to a suspicious mole. It then scans the skin using several different wavelengths, and reportedly “seeing” under the skin at an extremely high resolution. Then it sends that data to a system that uses fancy algorithms to compares those images to their growing database of known benign and malignant tumors to determine whether or not the mole should be biopsied or removed.

This is the same thing that dermatologists do every day — sometimes dozens of times a day — looking at skin and making a judgement call about whether or not something needs a biopsy. It seems like MELA’s device (called MelaFind) aims to solve two problems: first, they catch some melanomas that might not have been caught by the doctor, which is a potential lifesaver for a scary disease like this that is best caught early; and second, they make the process of doing biopsies more efficient, cutting down on the number of benign moles that get biopsied (and therefore leave a scar and incur a cost).

Here’s how Lichtenfeld explains it in the tease:

“But here’s the thing: Studies show that even the best dermatologists miss up to 30% of all melanomas. That’s not only dangerous (and potentially deadly) for the patient, but thousands of doctors have faced expensive malpractice suits because they missed a mark on a patient’s body that later turned out to be cancerous.

“This company’s device eliminates the guesswork that can lead to these deadly mistakes.

“In Phase III clinical testing, the device accurately identified 125 out of 127 melanomas – a very impressive 98% success rate. Meanwhile, dermatologists using the ABCDE method were only able to identify 70% of the melanomas.

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