Don’t need high IQ to see scam
January 13, 2011 4:10PM
Updated: May 1, 2011 4:47AM
Dear Mr. Berko: What do you think of Manny Backus, the 27-year-old chess genius with a 157 IQ, who has developed a proprietary system to analyze and chart stocks? Backus, who is soft-spoken and obsessed with the market, claims that we can make $500 in the first 59 minutes of trading every day and then quit for the day. That’s over $150,000 a year and no more than 1,575 people will be allowed to use his system. This is a great one-time chance for us to become rich. And it’s advertised in SmartMoney Magazine, which is published by Dow Jones. And that’s an impressive testimonial.
Dear L.P.: I get SmartMoney, too. I don’t know why because I don’t pay for it, but I get lots of magazines and books that I don’t pay for. I figure if I don’t have to pay for it, then it’s probably worth the cost so I don’t read it. And every two weeks I drop off a bundle of books and magazines at the library that used to be open on Saturday. Ah … things were so different before they changed.
Meanwhile, I’m sure that Manny Backus has a 157 IQ. I know two morons with a 157 IQ. I’m sure that Backus is a chess prodigy. Jim Backus was a chess prodigy, too. And I did read Manny’s advertisement and have no doubt that Manny is soft-spoken and obsessed with the stock market. So was Bernie Madoff.
And I have no doubt that SmartMoney must be terribly hard up for advertising to stoop as low as Sirius Radio and print that deceptive and fallacious mishmash on page 87 of its January 2011 issue. But if you sincerely read all this and believe that Manny is limiting his subscribers to 1,575 who will pay him $300 per month plus other costs, then give it a shot. Wasn’t it the Greek philosopher Plato who observed, “Drachmas quickly depart from fools”?
Try to be logical about Backus’ claims. He claims you can “make enough money in the first 59 minutes of trading to take off and do whatever you want for the rest of the day.” I know lots of professionals who trade their accounts every day. None makes money every day. Not one makes enough money in the first 59 minutes of market action to “take off for … the rest of the day.”
Backus’ system may be “time tested and proven.” Well, your health insurance policy is time tested and proven. The health insurance industry has been testing various tricky policies for years, and when it’s time to collect, it’s proven that you seldom get what you think you’re covered for.
He claims he has a “proprietary chart analyzing tool that reveals what stocks to buy and sell.” And the returns are “usually 12 to 13 times higher than those achieved by the most seasoned trading professionals and investment funds.” Jumpin’ Jehoshaphat and Jimmy Crack Corn! I sent copies of Backus’ advertisement to a few trading pros and mutual fund managers asking for their comment. One fund manager sent me an e-mail with just two letters — the first letter was a capital B. The others to whom I sent this advertisement were less kind.
Backus claims his proprietary system has a “70.1 percent successful rate at predicting …” Now listen up. If that number were accurate, every mutual fund and trader on and off the Street would pay through the gazoo for this tool. Heck I’d even pay through half the gazoo.
So why doesn’t Backus use his system to make a fortune in the market for himself so he doesn’t have to peddle this dreck? Or why doesn’t he sell it to Goldman “Sucks,” who would pay him several billion in cash plus a percentage of the profits if the system works? “There’s a sucker born every hour,” P.T. Barnum declared, “and a financial fraud born every minute to make sure no sucker is spared.”
Address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at firstname.lastname@example.org.