Staying ahead / Online investors should beware of get-rich-quick hustlers
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Anything new that happens in the investment world is sure to become a hook for somebody's get-rich-quick hustle.
Today, the hustlers are riding the online investment craze. Their hype makes computers sound like magic money
machines. You just learn the right "strategies" (at a pricey seminar), click your mouse and rake in the bucks.
Without doubt, there's plenty to learn about using computers to help you pick stocks. But a lot of teaching is free on
the Web or available in books or classes that are modestly priced. You don't have to pay the stiff prices the gurus
charge.
Take the Utah-based Online Investors Advantage, which swooped into New York City last month on a blitz of
hyperventilating radio ads. My associate, Dori Perrucci, attended one of its free seminars. About 150 people showed
up.
They heard a 90-minute sales pitch for OIA's two-day investment boot camp: $2,995, if you sign up "right now," and
$1,995 for the home-study version. No cash? No problem. Put it on your credit card.
Perrucci said that the meeting felt like a religious revival -- calling her not to God, but to mammon.
OIA's pitch is familiar to any connoisseur of quick-buck games: "Retire early and retire rich." "Use the Internet to turn
Wall Street into your own personal gold mine." "Turn as little as two hours a week into hundreds -- even thousands --
of extra dollars every month."
OIA's co-founder, Ross Jardine, says that's no hype, because many people are indeed getting rich in stocks. His
seminars are packing them in. OIA reported $4.4 million in revenues in the first quarter of this year, compared with
$3.4 million in the last three quarters of 1998.
At OIA's boot camp, attendees learn how to use a Web-based stock- screening program that supposedly shows you
which stocks to buy and sell. (The program isn't OIA's; it's leased from Telescan, another company on the Web.) They
also learn about option trading, and get a newsletter that they hope will make them richer quicker. This package of
services costs $495 every half year.
Jardine supplied us with two happy customers to talk to: Jim Carpenter, 47, identified as a consultant in Dallas, and
Carol M. of Salt Lake City, a flight attendant, who didn't want her last name used. Both said they've made money fast,
by buying and selling options.
Joyce F., 65, of New York City, attended the same free seminar that Perrucci did. She's a physical therapist, disabled,
looking for a new line of work -- and doesn't own or use a computer. She went on to take the $2,995 course, putting
the cost on her credit card.
Her verdict: "Way, way over my head." She still hopes to make money with the system, but says it's "not for people
who are beginners with computers or with investing."
For lessons in online investing, you don't have to pay nearly as much as OIA demands. Lessons are available in many
places. For example, the highly regarded stock publication, Value Line, charges $85 for lessons about its
stock-screening service (the service itself costs $995 on the Web, or $570 on paper). Dow Jones, which publishes
The Wall Street Journal, offers six Net-based courses at $49 each.
I'm deeply bothered by OIA's hype. At its free seminar in New York, the speaker, Steve Craig, touted possible
investment returns of 60 percent to 600 percent, in as little as a week or a month. A brazen OIA promotional brochure
raves that you can turn "small sums into huge profits quickly, easily and safely."
Safely? When you're speculating in options and darting in and out of stocks? Says Jardine, "We use some aggressive
tactics to get people to come, but we deliver on value." To me, that excuse isn't good enough.
OIA speakers love to talk about Gladys Holm, a secretary who never made more than $15,000 but invested in stocks
and died in 1996, leaving more than $18 million. The message: Sign up with OIA and this could be you.
Here's what OIA doesn't tell you. The little firm Holm joined in 1927, and whose stock she bought, grew into the giant
American Hospital Supply Corp.
In short, she got rich not by plotting her moves from stock to stock -- as OIA teaches -- but by buying a good stock
and holding it for a lifetime. She's the anti-OIA. Think about her, before shelling out $3,000 to anyone. |
