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On the Wade Cook Trail

The Wade Cook Show rolled into New York last weekend and it was an event I couldn't pass up. I've read Cook's books, listened to his audio tapes and even would've watched the video if it hadn't unwound and jammed in my home VCR. Yet, I'd never seen the show in person, and since this was just a Financial Clinic, the tuition didn't run into the four figures. With all these factors swirling, I anted up $22 to sit in. At 8:40 a.m. on Saturday morning, I took a seat among another 100 or so "Cookies" at the Marriott East Side Hotel, with no special press credentials, no tape recorder, no special questions to ask, not even a free bagel or muffin. (Wade is a little cheap with the refreshments -- only ice water was served.) So here's the skinny on the Off-Broadway version of the Wade Cook Show.

* * * * *

Much in the same way that I have never watched an entire Olympic Biathalon, I had never seen an infomercial in person. At 8:45 a.m. when someone hit the Play button on a VCR in the front of the small meeting room this past Saturday morning, that all changed.

The video showed a roundtable discussion involving Wade Cook and several investors who'd used his strategies to prosper. Among the faithful: Lisa Johnson, who didn't have the time to work her full-time job anymore because she had been too busy trading and making a bundle off Cook's strategies; Richard, a guy nondescript enough to be a CIA spook, made $70,000 in one month playing stock splits on U.S. Robotics; and Morgan Armstrong, a fresh-faced 17-year-old who successfully trades stocks from his cell phone while driving to high school, where he lettered in baseball and, of course, sang in the choir.

The crowd in Manhattan Saturday morning resembled those on the tape. Racially and ethnically mixed, the gathering included both 20-somethings and 60-somethings, blue-collar Joes and starched-shirt types. Over the next three hours, we'd get small tastes of information about writing covered calls, buying stock splits and rolling stocks. And, of course, frequent mention of how we could acquire the knowledge that would give us the man-sized returns that could bring financial freedom. Along the way, the instructor mocked many institutions: college educations that never taught us how to make a fortune, mutual fund investors who were foolish enough to give their money to a manager and not hold him to monthly performance goals.

* * * * *

By 9 a.m. the room was mostly filled and up came Erin, a young woman perky and pretty enough to be cast on MTV's next Real World saga. She welcomed us and introduced the instructor, Sal Salzillo, a man "hand-picked and hand-taught" by the master himself. The crowd took to Sal instantly as he cracked jokes about his long-gone hairline and scoffed at "buy-and-hold" investment strategies. This seminar, Salzillo told the newly initiated, was a "buy-and-sell" program. Long-term plays are fine, he said but "at Team Wall Street we think monthly, weekly, even daily."

The knowledge he had to offer would help not just the investors, but also "their families." The crowd seemed familiar with Cook's basic tenets; they answered in unison to a question about the "meter drop" strategy. (This is something about driving a cab, one of Wade Cook's former professions. Instead of hunting for the big fare, it's better to grab 10 small fares. It's not clear how this is known, but Wade claims that he set a record for taxi-driving prowess, using this strategy. All that hustling for fares transformed Cook the Taxi Driver into Cook the Philosopher/Author/Financier.)

Salzillo told how Wade once used a "rolling" strategy and made 200% on his money. Rolling involves spotting a stock moving in a trading range, or pattern. You find the high and low point of this pattern, and you trade in that range. Because, of course, history always repeats itself. Remember, this is Wade Cook's strategy, not mine.

Wade's 200% return on this strategy wasn't exceptional. There were a lot of those three-digit returns bandied about. The real barrage, however, began about 10:30 a.m. as Salzillo made a seamless transition from explaining the nuances of Cook's rolling stock strategy to shamelessly hawking the company's other seminars and products. First, he warned the attendees not to "mess" with the formula, then began explaining the "Zero to Zillions" educational series of audio tapes and workbooks. Z-to-Z outlines the tactics that Wade Cook Financial offers its clients. For just $1,295, the Z-to-Z "is like bringing Wade home with you in a box."

Then there was the Wealth Information Network, or in Cook-speak, WIN. That's where you get "ideas" on where to find the famed rolling stocks. Remember, though, that Wade Cook Financial is not a brokerage firm or investment bank and thus doesn't make stock recommendations. But if you subscribe to the WIN, you get companies that are good targets for rolling-stock plays. Salzillo explains that instead of offering recommendations, instructors tell WIN users what plays they are making, and if you want to follow their moves, well, go right ahead. It's a beautiful semantic triple-lutz to avoid being regulated by the Securities and Exchange Commission.

Another of Cook's strategies, buying stocks on news of splits, is also featured prominently on the WIN. There's a whole list of them each week -- 12 pages worth, according to Salzillo -- but remember, these are not recommendations. They are just specific company names broken down by stock price that are likely to split in the near future. The price tag for six month's worth of non-recommendations: $1,995.

Next on the sales pitch: the two-day Wall Street Workshop, slated for the first week of March in New York, for $4,695 -- and you can add a spouse or significant other for just $2,695. And, Salzillo reminded them, you should make sure you have a brokerage account open before you get to one of these conferences. In a zeal usually reserved for tent meetings, Salzillo says you'll need that account because tips will be given, people will already be making money on the tips, and you won't want to feel left out. And those pay phone lines will be long -- so be sure to bring your cell phone.

Then Salzillo rolled out the heavy artillery: big discounts. There was a $500 travel credit, a $500 scholarship, and you could even bring a teenager, just like young choirboy Morgan, for free. And, if you signed up for the additional one-day BEST (Business Entities Skills Training) seminar, you'd get a free Zero to Zillions package and a six-month subscription to WIN. The $3,695 tab (plus a one-day offer of $1,414 for the significant other) was chump-change to the Cookies, who'd already heard that one Wall Street Workshop attendee racked up $17,000 before the workshop was over.

"You pay for knowledge once, but how long do you pay for ignorance?" oozed Salzillo. He encouraged them to "let someone else pay for it. Someone like Mr. Mastercard, Mr. Visa or Mr. Discover," because they'd have made it back before their next monthly bill came.

But getting in on this deal required action. Right away! He checked with perky Erin in the back of the room, who barked out that there were only eight places available for the Feb. 18-19 workshop in Newark, N.J., and nine spots in the upcoming New Haven, Conn., meeting. Then the checkbooks started to open, and the credit cards were slipped out. One attendee went to register with a handful of $100 bills.

* * * * *

The planned seven-minute break stretched to 20 minutes as the crowd lined up to fill those empty spots. A married couple consulted with each other, buddies who'd come together debated the merits of the strategies, and others went to the front to study the Zero to Zillions material.

The second half of the Financial Clinic, lasting about 35 minutes, was spent going over the potential profits from options trading, mostly writing covered calls, investing in stock splits (he threw out company names such as AOL, Dell and Eli Lilly) and margin accounts.

But the people apparently liked what they saw. I overheard only one negative conversation, an older gentleman explaining that Cook's strategies were too complicated for him. And it looked like a good day for Salzillo, who reportedly gets a cool 10% of the room's take for the day. If he filled the 17 openings at $3,695 each, the room made more than $62,000, putting his take at $6,200. Throw in a few Zero to Zillion packages and that's decent money for three hours work. Not exactly Zero to Zillions, but not bad.

Otherwise, Cook's true marketing genius was evident. The company managed to pitch high-priced products to 100 people at one time and, in the words of his "hand-picked" instructor, got someone else to pay for it -- them.

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