Ever wonder about all those amazing easy-riches strategies that come in the mail? You know it can’t be that easy … but, but ….

Well, I wonder about them. And I marvel at the skill of the copywriters who prepare them. And, well ….

So here was a message I got two years ago from one of you, Sandy Price:

"While you’re checking out stock market systems, check out the ‘Pitbull’ system advertised nearly every day in Investor’s Business Daily (great paper, by the way). Over 200% per year! He retired in his 40’s! Just thought you might get a chuckle."

Indeed, Sandy signed up. "It’s not making 200% per year this year for me," his message went on to say. "It does not appear to be for him either, based on the picks at the web site. But I am making money at it."

Hmmm. That was November 1996. So how has it turned out? Did Sandy earn 200% a year? Does retirement loom?

In his case, as it turns out, no.

"Commissions on that system were eating me alive so I abandoned it," he reports. "Don’t know how I would be doing now, but I was losing money too fast to continue with it."

(Sandy traded with Charles Schwab, the well-known discounter — but not a deep discounter. When you’re trading frequently — which I do not advise — even discount commissions can kill you. Say you made one trade a day. The difference between, say, $13 a trade and $50 comes to about $10,000 a year.)

Of the 33 positions Sandy traces on the Pitbull system, the net result appears to have been a loss of $3,663 on an investment of $83,026.

The point of this is not to attempt any kind of scientific debunking of the Pitbull method. I’ve actually forgotten what the method is (though I do remember being so taken by the sales literature that I, too, sent in my money, out of curiosity, but then never found time to read the material, let alone "try" it).

Rather, I just mean to suggest that in the real world, you are probably doing the right thing if you resist the temptation to open these remarkable direct-mail solicitations promising the can’t-lose newsletter or the money-back-guarantee seminar or the book-and-tapes-normally-an-$849-value-yours-for-just-$149.

Isn’t hindsight fun?

Tomorrow: The New Dogs of the Dow System

 

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