The Rise of the Stock and Currency Trading Infomercials

During the whole dot-com boom, when the subject of stocks and options seemed to dominate small talk from coast to coast, I always wondered why there were almost no infomercials for courses on stock trading. I knew from reading stock investment magazines and my own junk mail that there were an endless number of courses supposedly teaching people how to get rich trading stocks using various systems. Yet during the whole stock boom none of these types of trading systems was being advertised through TV infomercials.

No longer! Now systems for trading stocks, options, commodities futures, and foreign currency (forex) make up the largest category of money making/home business infomercials, surpassing the real estate investment infomercials that had been dominant until then. These infomercials include WizeTrade, Teach Me to Trade, Optionetics, 4X Made Easy, 5-Point Star Trader, InvesTools, and Options Made Easy just to name a few.

I am curious as to why these infomercials for trading stocks, currency futures, etc only popped-up after the stock market crash in 2000. I guess when the stock market was roaring upwards, everyone who just followed the herd and bought any tech stock made a bundle, so there was probably no demand for a “get rich” trading course back then. But since the bust, all those sad people still holding onto dogs like Lucent and JDS Uniphase (or even worse eToys and Pets.com) must have been fairly desperate to get back to the returns of the halcyon days of 1998-99.

The trading of futures, options, forex, and commodities is known to be a complex and risky undertaking, so it wouldn’t seem to me to be the most natural money making system to sell via infomercial, where most of the people just want something to fall into their laps. Of course these infomercials stress how “easy” their trading systems are. The WizeTrade software, for example, tells you when to buy and sell a stock by showing you a red or green light!

Still, I think a lot of the appeal of these sorts of stock and options trading systems is mainly to the ego of middle-class, educated men who think they are clever enough to outsmart everyone else.

It all reminds me of a man named Wade Cook who advertised his stock trading system heavily on the radio in the late 90s. He claimed that he made returns of 20% each month—which if do the compounding means he should have owned the entire universe by now. Instead it looks as if Mr. Cook’s company met with a less felicitous fate. (Also see this series of articles on Wade Cook from the Motley Fool.)

So for anyone considering any of these stock or forex trading systems, all I have to say is good luck—and may all your trades be good ones.