This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Trade-In: Wade Cook Posts $1.7 Million in Trading Losses

Before you plunk down $2,500 for Wade Cook's November Hula Moola stock-trading seminar in Hawaii or $4,900 for his Wall Street Workshop, there's one thing you should know.

The folks at Wade Cook Financial (WADE) aren't very good traders.

According to a 10-K filed Monday with the Securities and Exchange Commission, Seattle-based Wade Cook Financial lost $1.7 million trading securities during the quarter ended June 30, reversing $700,000 in trading revenue in the year-earlier period.

Cook rose to popularity in the mid-1990s writing books, producing tapes and hosting seminars on investing. Since then, he has made a living recommending trading practices to individuals. Among his favorites are buying stocks just after split announcements, using covered call-option trading (simultaneously buying stock and selling call options, using the call premium to offset the cost of the stock purchase), and setting what he calls rolling stock positions, in which investors try to time highs and lows.

Spoiling the Broth
Wade Cook's downtrend

Source: BigCharts

His popularity, however, has waned during the past year. That can be seen from the price of Wade Cook Financial shares, which have plunged from an all-time high of 5 3/16 in December 1997 to 3/16 Tuesday. It's also evident from the company's revenue, which fell to $34.9 million for the six months ended June 30 from $52 million during the same period in 1999.

A company spokesman says the trading results in the SEC filing are a "jumble between a lot of different positions," some with realized gains and losses on closed positions and some without on positions that are still active. He adds that the company's ability to instruct inexperienced traders is reflected less by its trading losses in the quarter than by the hundreds and thousands of testimonials from program participants.

Cook has managed to keep the seminar and book business bustling, plowing through reams of criticism, castigation by the Wall Street establishment, and at least three state regulators' investigations, including a 1999 lawsuit filed by the California attorney general's office. In seeking $18 million in refunds for people who had taken Cook seminars, the attorney general alleges the firm made misleading promises and ignored the state's three-day refund law.

A spokesman for the company didn't return a call requesting comment on the investigations.

Cook's business also included offering examples of winning trades he made and told of routine triple-digit returns, practices now under investigation by securities regulators in several states, according to one source familiar with the regulators' activities.

The cost of his seminars and tape series typically run into the thousands of dollars, and the low-cost seminars hosted by the company's staffers typically include recruiting speeches for the other programs. ( TSC attended one in 1998.)

More recently, his books have worked on setting up Nevada corporations, limited partnerships and other entities that would reduce tax exposure for individual investors.

Trading is still at the core of Cook's business, but the most recent numbers show that while lipstick serves many purposes, it offers little help to a pig.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $123.25 0.00%
FB $83.30 0.00%
GOOG $548.34 0.00%
TSLA $185.00 0.00%
YHOO $45.10 0.00%

Markets

DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs