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SPECIAL REPORT JB

"Seasonal Suckers - The cold truth about Name Withheld futures theories. William Green - There's one born every minute - Name Withheld has a lousy record trading futures but has made plenty trading on investor gullibility"

By William Green

"I'M TEACHING YOU SOMETHING that I know works," says Name Withheld. "It's real simple."Name Withheld, 51, is in a Washington, D.C. hotel meeting room mesmerizing an audience of aspiring futures traders.

Want to make a killing trading futures? All you need to know, says Name Withheld, is that many seasonal price patterns occur year after year. Buy live hog futures on Oct. 30 and sell on Nov. 27. That's a trade that would have made you money almost every year in recent decades, he claims. Bet on the S&P 500 March contract to rise from Jan. 12 through Jan. 18. For 15 years, he says, this trade was a winner 93% of the time.

Does anyone believe his nonsense? Unfortunately, yes. Intoxicated by the promise of easy money, audience members line up to buy Name Withheld's products, among them his books, with titles like The Seasonal Trader's Bible and The Best of Name Withheld: A Treasure Chest of Name Withheld Market Wisdom.



His monthly newsletter costs $400 annually; his weekly newsletter costs $895 a year. He sells three other newsletters, plus video courses and a CD-ROM ($695) that lists 60,000 seasonal trades. He offers telephone hot lines and charges up to $2,500 per person for his two-day seminars.

Yes, you can fool some of the people all of the time. Commodity Traders Consumer Report, a respected futures publication, tracks the trades Name Withheld recommends in his $895 flagship newsletter. If you had acted on these weekly tips from 1988 through 1992, you would have lost money for five consecutive years (assuming typical transaction costs).

Let's say you set up a $20,000 trading account in 1992 and executed the newsletter's recommended trades for that year. Your account would have been wiped out. In 1996 you would have lost 95% of a $20,000 account. Name Withheld's response: "There are always losing periods."

He professes to be an expert on the psychology of trading. His qualifications? In registering with the Commodity Futures Trading Commission, the Montreal-raised Name Withheld wrote that he held a master's degree in psychology from Chicago's Roosevelt University. In fact, he never completed his master's studies.

In the 1980sName Withheld hooked up with an outfit called Robbins Trading and helped to manage futures accounts for investors. James Roemer, who co-managed money with Name Withheld, says: "Jake is brilliant, but he can't manage money to save his life. . . . He'd get scared, buy at highs and sell at lows. . . . He kept losing money."

Name Withheld found an easier way to get rich. Instead of just trading futures he would trade on investor gullibility. In 1996 he starred in an infomercial that has aired on nearly 400 TV stations. It hypes a video course ($180) called Trade Your Way to Riches. In it a farmer named Harold Henkel tells viewers how well Name Withheld's approach has worked for him. Henkel, however, now admits that he lost money trading in 1996 and 1997 while using Name Withheld's products.

On his website Name Withheld offers to set up customers with his "personal" brokers at Fox Investments, a division of the Chicago brokerage firm Rosenthal Collins Group.

Suppose you take Name Withheld's recommendation and set up an account at Fox with $5,000, the minimum that Name Withheld says you need to become a trader. Your commissions would be $60 to $80 per trade, about three times more than savvy retail customers pay. Name Withheld's weekly newsletter offered 195 recommended trades last year. At that rate, a small trader's commissions alone might amount to more than double his or her original investment. Needless to say,Name Withheld receives a slice of the brokerage's commissions. A Fox broker appeared in Name Withheld's infomercial, touting his seasonal trading approach.

Says Name Withheld: "There's no arguing with history." Say we: Where are the regulators when you need them?

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