Feed: Investools Scam - AggScore: 62.7

Investools review (Part 2)

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If you are reading this page you have probably seen one of the infomercials put out by Investools. You are probably also wondering if you should take the plunge and give Investools a try. I want to reiterate that I do not think Investools is a scam, but at $2,000 - $20,000 it is vastly overpriced and there are better alternatives out there.

I have been a day and swing trader in the stock and bond market for the past 20+ years and I do beleive myself to have an acute mind to the field of investing. When you watch the infomercial they make it seem like making consistent money in the stock market only takes 5 minutes a day in the morning. Just switch on your computer and bingo the stock software just spits out winning stocks. If it were that easy, frankly they wouldn't be selling anything. They would just keep it for themselves. Investools makes money by selling (and upselling) investor education material.

Go To Investools Review Part 1

Investools starts out with the $2,000 weekend seminar and ony ramps up in various levels to a "PH.D. program" for an additional $15,000 . They also operate there own brokerage company, so they make money there as well. Check out there parent company, Think or Swim (ticker SWIM) . You will find some interesting things out.

I hope I have helped with some of our questions about Investools!

Investools Review

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I want to start out by saying that I don't think Investools is a scam. I do think that it is overpriced for what you are getting! For between $2,000 and $15,000 you would expect a Stock trading education that would blow your doors off. In these tough financial times, that is quite a bit of money! You have to make a lot of trades to break even. I attended an Investools seminar several years ago and was turned off by all the hype and up selling that went on. I have been in the stock market activity for over 20 years now and I am always looking for ways to improve trading acumen. After the seminar, while I did learn some things, I felt I could have found the education for a much cheaper price elsewhere.

I currently use two stock services to nail down the stocks which are ripe to trade. I use INO.com's MARKETCLUB software and a stock educational series SECRETS OF SUCCESSFUL TRADERS to find money making trades. Below I outline the features of INVESTOOLS, MARKETCLUB.COM and SECRETS OF SUCCESSFUL TRADERS. I hope you find it useful.

Investools

Is the stock market running out of steam?

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Hello everyone. I found a nice video analyzing the current state of the stock market. In fact the site has dozens of good video that are updated frequently. I find the site to be a much more thorough and cheaper alternative to the materials Investools offers. They are experts in the field and have been leaders for as long as I can remember.

Great Alternative to Investools

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Hello everyone! I hope everyone made some nice money in the recent stock market rally. My personal best was with Fedex (bought down near $33) I will be keeping an eye on this stock in the future. I will buy call options on dips as this is a company that will be much higher in 5 years. They are in no danger of going out of business.

If you read throughout my blog you will see that while I do think Investools does provide quality information, there are better alternatives to the prohibitive price tag of $3.000-$15,000. I would start out with some of the books and software you will see under my picture in the side bar. These are much less expensive and equally as valuable.

Have a great day!

Alternatives To Investools

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I wanted to look at some of the alternatives to Investools. In my mind there are three major stock option training courses that have been mass marketed to the american public. They are Investools, Optionetics and BetterTrades. They all have two things in common, they are pricey (several thousand just to start) and will nickel and dime you with additional purchases. Maybe I should say arm and leg you to death. I would rate Optionetics as the best stock option training course of the three. it has the most impressive track record in my view. The next would be Investools and finally Bettertrades. It is just basic stock market software that is way overpriced. There is good stock software out there to be had but it is a very tricky thing to find the right one. That is not my expertise as I still like to be the major decision maker in a trade decision.

You can find some decent free stock option education material on the Internet. But, in general if it is free it not in-depth enough to get you to your final goal of wise trading. In an earlier post I mentioned the authors such as Darlene Nelson and John Murphy.......... reading some of there material is a good place to start.

Other stock market education material I would recommend are:

Investools review

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I was looking at the Investools site the other day and came across there articles section. One article caught my attention. It deals with the terminology used in trading stock options. They mentioned five factors in how an option is priced. They are alpha, beta, gamma, vega and rho. Stock investing in general seems to use greek letters in it technical terminology. They are nothing to be intimidated by they are just symbols they use.

In Lehman's terms, A stock options price is determined by what the price of the stock is ( a $70 dollar stock's option will be more expensive than a $20 stock). That is what alpha stands for. Beta and vega are closely related. It basically is am sure of how volatile a stock is. The higher the volatility, the higher the price of the stock option. Makes sense, right? Theta si basically the time left until the option expires. The longer the option has until expiration the higher the option price. Rho dis definitely the most obscure of the terms. It has to do with the interest rates which are prevalent at the time. Not very influential.

So in summary, The higher the stock price, higher the stock volatility, and the longer time until expiration all make for a higher option price. The opposite is true for a cheap option price. There can be some good deals at both ends.

Investools scam? yea or nea

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I wanted to tell you my personal experience with Investools. I have been involved with stock trading for 30 years so I have some insight into the online stock trading industry. I saw the TV commercial like most of you and went to the free seminar. I assumed I would get an upsell. Which I did. I walked in and this well tanned gentleman form orlando spent 2 hours talking about stock option trading and specifically about buying spread options around earnings reports. Not a bad method, but one that can be hard to find opportunities in todays volatile stock market. You see, with the increased volatility of the recent stock market, options prices have increased therefore the price of a spread has increased. Now they promise to give you stock trading software that will find these opportunities for you. They don't mention that that will be an extra $3000 for that stock trading software!

Back to my experience, At the end of the two hour spiel on stock option trading and some scare tactics to make you feel like you know nothing about stock investing online, they get to the money question. If you decide in the next 30 minutes the price is $1995 for the weekend seminar. If you decide later, the price is $2995 . Quite a squeeze for a decision involving a large sum of money! I guess if for 2k you got everything you needed I would consider getting involved in the stock trading course of Investools. The scam comes in that they don't tell you about the "advanced" online stock trading and the $2500 stock trading software that you need to buy to really make the Investools course worthwhile. For $10-15,000 I can purchase a lot of stock market training on my own.

So is Investools a scam? You decide.

Investools traders average 30-40 trades per month

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Did you know that part of the Investools scam is to make you think that their "system" is easy-peasy. Just turn your computer on and the software (which you must pay several thousand in addition) does the rest. In perusing the shareholders lawsuit against Investools, the average trader involved with them makes 30-40 trades a month. There is no way you can make that many trades every month without it taking a substantial amount of your time and energy. I make less trades than that myself, and I consider myself an active investor.

My Favorite CNBC Reporters

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My Favorite Investing Authors

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I said in my last post that I would look at the various authors that I have used to educate myself about the stock market. I believe that there are many smart people out there with a lot to teach all of us about investing. Even today, If I were to pickup a beginners book on investing, I a sure I would learn something from it. Investools charges thousand of dollars for info that could be found either at you library (for beginning level) or by going to amazon.com. Some the authors I recommend searching for are:

Darlene Nelson ( excellent for QQQQ tutorials)
John Murphy ( technical trading expert)
John Bollinger ( he of the Bollinger Bands fame)
Martin Pring ( wrote the first book I bought on options long ago)
Oliver Velez (Core trading and Swing trading)

Go to amazon and check out what they have to offer!

Have a great day!

TD Ameritrade to pay $6,400 for each Investools custumer

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I was perusing the documentation of the pending sale of Investools (SWIM) for $606 million and one figure jumped out at me. TD Ameritrade is paying about $6400 for each of the current 94,000 Investools customers. That to me seems high, but another fact that jumped at me was the average customer trades 450 times a year. That is about 40 trades per month.

That should give you some insight as to what to expect if you decide to become a customer. As I have mentioned before, be prepared to fork over some hefty cash to the Investools scam. Money which I think can be found elsewhere on the web for much cheaper. I plan on reviewing my books overnight and look at some good authors I would recommend in my next post.

Investools being sued

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It appears as though there may have been some foul play by the board of directors at Investools (Ticker : SWIM). The company is being bought by TD Ameritrade for $3.34 cash and 0.398 shares of TD Ameritrade common stock . The lawsuit questions whether the board acted in the best interest of shareholders.

In other news. Investoold is a major sponsor of the new CNBC options show. By now you have some of my feelings for the Investools scam of over charging for information. I do have a high regard for CNBC though.

My Review of Investools is up again!

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With the recent spike in volatility due to the stock market downtreand recently, there have been great opportunities by learning the methods and stratagies which Investools teaches. As I have stated before, while I believe that Investools teaches sound stategies, its cost is higher than it should be. You can find similar teachings for tenths of the price.

In the coming weeks I will go over some of the books and courses which I have used to teach me all about the stock market. The first thing to do is start watching "Fast Money" with Dillan Rattigan on CNBC. You can also learn some things from Jim Cramer's "Mad Money" but I find him to be a little too much to take.

If you have some suggestions please leave a comment!

The bearish put spread

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Initiating a bear put spread involves the buying of a put option on an underlying stock, while at the same time writing a put option on the same underlying stock and expiration month, but with a lower strike price. Both the buy and the sell sides of this spread are opening transactions, and are always the same number of contracts. This spread is sometimes more broadly called as a "vertical spread". A family of spreads involving options of the same stock, same expiration month, but different strike prices. They can be made with either all calls or all puts, and be bullish or bearish. The bear put spread, as any spread, can be executed as a "all or nothing" in one single transaction, not as separate transactions. For this bearish vertical spread, a bid and offer for the whole package can be requested through your brokerage firm from an exchange where the options are listed and traded. Brokerages which specialize in options would be best for this.

An investor often employs the bear put spread in moderately bearish market market conditions, and wants to capitalize on a minimul decrease in price of the underlying stock. If the investor's opinion is very bearish it will generally prove more profitable to make a simple put purchase.
An investor will also turn to this spread when there is uneaseiness with either the cost of purchasing and keeping the long put alone, or with the confidence of his bearish market opinion.


The bear put spread can be thought of as doubly hedged strategy. The cost for the put with the higher strike price is partially offset by the money received from writing the put with a lower strike price. Therfore, the investor's investment in the long put and the risk of losing the entire premium paid for it, is reduced or hedged.

Stock option Put and Call example

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The first way that I got started investing som 30 years ago was with stock options. I found the use of puts and calls as the best way to put my knowledge of how I thought a stock could move (or not move) to use. For the novice, I will use an example of the stock GRMN. On Tuesday it had a price of around $100. For about $4 you could buy a november call (the right to buy the stock) at the $100 dollar strike price any time in the next 2 weeks. So if the stock rose to say $107 on friday, you could then sell for a $3 profit! Conversely, If the stock only moved to 102, the call would be worth about $2. Therfore producing a loss of $2. You do not have to hold an option until expiration, you may sell or buy at any time you wnat to. By the way, each stock option controls 100 shares of stock. So an option with a cost of $4 would cost $400 plus a $7-10 commision to the broker.

A Put is the opposite of a call. It is the right to sell a stock. Aside from straddles, this is the way I got started trading. I bought puts onoverextended stocks. In my experience, stocks tend to fall much faster than they rise. This is great for the use of puts. One of the problems with buying and holding of stocks is that you can only makemoney if a stock goes up. Puts allow you to profit whena stock goes down as well. In the above example of GRMN, a november 100 put cost about $4 on tuesday. If the stock moves below $96 anytime time in the next 2 weeks, you will have a profit.

I mentioned that I got started with straddles. A straddle is simply buying a put and and call at the same time. It is a very simple way to take advantage of a stock you think is ready to move!
Take and add GRMN to your watch list for the next 2 weeks. I feel confident it will move more than $8 dollars from $100. It may even move on both sides of 100, making both the put and call possibly in the green. Another stock I am keeping an eye on is GSF. I put a straddle with a cost of $3.10 at the strike price of $85 yesterday.

One subject that Investools teaches is knowing when to sell. I believe this is very important and often overlooked. Everybody talks about when to get into a trade. Knowing when to get out will make you a very sucessful trader. That is something which I will stress throughout this blog!

Have a great day!