Guru Ratings
Wade Cook
Bad.
Remember my ratings criteria. I’m not judging these gurus on “global” or moral values, but very specific criteria. Many of my favorite books would be rated “bad” by my criteria for self-help (probably, because they are not self-help books). My ratings don’t reflect how well an author met his own goals, but how well they met my criteria for useful, accurate self-help.
Wade Cook’s company, which sold finance seminars, settled with the FTC in 2000 over misrepresenting earnings potential. His company did not comply, so the FTC filed charges again. But it was too late. In 2002, his company was forced into bankruptcy by employees and contractors who hadn’t been paid for months.
In 2007, Cook and his wife were sent to prison for income tax evasion.
Eric Tyson examines one of Cook’s get-rich-quick schemes in Personal Finance for Dummies:
Cook’s “techniques” included trading in and out of stocks . . . after short holding periods . . . The perils of [this technique] are numerous:
- You’re going to rack up enormous brokerage commissions.
- On occasions where your short-term trades produce a profit, you pay high ordinary income tax rates rather than the far lower capital gains rate for investments held more than 12 months.
- You’re not going to make big profits—quite the reverse. If you stick with this approach, you’ll underperform the market averages.
- You’re going to make yourself a nervous wreck. This type of trading is gambling, not investing.
Hopefully, this is enough for you to avoid him and his books. If not, read this, too.