The Mysterious Disappearance of Callwriter.com (Part 5)

This blog mini-series presents discussion on the sudden 2013 cease and desist exhibited by Callwriter.com.

I categorized this mini-seires under optionScam.com because I have often found a close association between trader education or trading system products and internet marketing. In the context of trading, “internet marketing” is synonymous with ripoff. Developing profitable trading systems is a laborious project involving hundreds to thousands of hours. Disproving a system can be equally difficult for those without the theoretical understanding to do so. Suckers looking to make a quick [thousand] buck[s] trading stocks, futures, or options are therefore prey to the internet marketers who float attractive products.

In the world of trading/investing, the free lunch is simply never to be had. Many nefarious entrepreneurs/companies advertise and market to make people believe otherwise.

Another thread about the mysterious disappearance of Callwriter.com is seen on The Option Guru website. We can even find a video on that site where we hear (not see) Mr. John Brasher himself! Maybe The Option Guru is a believer…

Some further searching turns up this page. Wait… that’s also The Option Guru! The content here is from 2009, though, so maybe he didn’t know enough about options to be a guru just yet. Under the “About Me” section I can see his name is Jeff. When I see the same people on different websites then I start to get suspicious.

Look closely back to that first website from two paragraphs above and you can see another product being advertised: “Trading Pro System.” I did an Internet search trying to determine if this was fraudulent and I found this website. When I see the same product being sold by multiple people (e.g. “Eric Holmlund,” “David Vallieres,” “The Option Guru), then I start thinking optionScam.com. It’s more like these are affiliates all cashing in on an internet marketing scheme just like many distributors sell Mary Kay cosmetics (except the latter is a real product with substantiated value).

Ultimately, the business theme always seems to be the same: who cares if the product can really make anybody money as long as it has marketable reason to exist and sustainable demand.

optionScam.com, folks! Sometimes it’s hard to nail down precisely but if it’s too good to be true…

If it walks like a duck and quacks like a duck…

If there’s reasonable doubt then come about!

The Mysterious Disappearance of Callwriter.com (Part 4)

I’ve been reviewing the Twilight Zone-ish annals of a premium trading service that suddenly ceased to exist. Here is the reply to my response shown earlier:

> Mark:
>
> I have no disagreement with your post and comments
> regarding the “landscape” of snake oil salesmen
> etc. I myself am still owed quite a bit of money
> from the untimely and criminally negligent demise
> of MF Global.
>
> I have no problem with group members voicing
> (especially when asked) their opinions of various
> advisory services, trading rooms etc. There are
> certainly more than a fair amount of less than
> honorable folks out there who will willingly take
> your money and not bother to provide anything of
> value in exchange.
>
> Alex’s post seemed to be written by someone having
> no actual knowledge of what happened to Mr.
> Brasher. Regardless, he basically wished him dead.
> I thought that was WAYYYY over the top. I made no
> personal attack on Alex, nor did I in any way
> excuse what happened (or may have happened) with
> Mr. Brasher and his Callwriter service.
>
> Alex’s follow-up post in response to yours, which
> included personal attacks on me and insinuated
> that I (with Mr. Brasher as my leader) was somehow
> complicit in the demise of Callwriter, simply
> demonstrates that my original post responding to
> Alex’s was spot-on.
>
> I guess when one has no facts to support their
> position, or are actually called out to explain
> why they have chosen to wish death upon someone
> when they actually don’t know anything about the
> reasons for the unfortunate closure of Callwriter,
> they resort to personal attacks unfortunately.
>
> Best Regards.

I will wrap up this business drama in the next post.

The Mysterious Disappearance of Callwriter.com (Part 3)

A smattering of subscribers seemed to be out money when Callwriter.com went offline. I continue with a forum thread addressing this occurrence that took place in March 2013.

In response to one trader who commented how unfair/mean it was to be angry with the service for disappearing without advanced notice, I chimed in:

> Given that the landscape of investing and trading
> is littered with so much in the way of snake oil,
> con-artistry, and other shenanigans, a person who
> walks away from paying customers with nary a word
> nor a refund deserves all the hatred, anger,
> disrespect, and prison time that s/he may get. I
> see no reason to be politically correct on
> something like this; Callwriter subscribers got
> had, plain and simple, and I don’t blame
> them for being angry about it. “Common decency”
> and “callous disrespect for others” have no place
> in this context.
>
> If you don’t believe the financial industry to
> be a hostile landscape then I suggest you start
> watching American Greed on CNBC. One way
> to lose money is by being scammed; increased
> awareness in this area can only make us better
> traders.
>
> Mark


> As one of the subscribers who got s……d, I
> think I can speak with a little authority. I
> actually met John. While he owes me a few
> months of subscription, I don’t think he owed
> me anything else. He seemed like a nice man.
> His wife was a nice lady. They had a family.
> It’s too bad. Life goes on. One man’s
> reputation is ruined.
>
> In a perfect world, I would have liked a
> refund, but that wasn’t forthcoming. This is
> opinion only, but I think he must have been
> in some serious financial distress. He was
> an attorney by profession. He had enough
> sense to not post on the website acknowledging
> problems. Not honorable, but it’s what a good
> attorney would have advised him to do.
>
> For his subscribers, the site was simply an
> information source. It crunched numbers and
> provided lists of candidates. Selection for
> trades was entirely up to the subscriber. The
> results were mine and not John’s. I miss the
> tool.
>
> Mark’s right, people are out to screw you.
> That’s why I choose to be a self-directed
> trader and investor. If this is the biggest
> loss I experience from the financial
> community, I will be well ahead of the pack.

The Mysterious Disappearance of Callwriter.com (Part 2)

My last post introduced a forum thread discussing the sudden, unannounced 2013 closure of Callwriter.com. I generally think the financial landscape is littered with snake oil and I find it interesting when questionable/unethical things like this occur. I continue:

> Who would care for a trader who can NOT make a
> living on his own calls: let him RIP.


> Since you seem to be certain of the reason for
> his decision to close down his website, and go
> AWOL, perhaps you can clue us in as to how
> bad his calls were so the rest of us can
> potentially avoid making the same investing
> mistakes that caused him to RIP.
>
> If on the other hand, you don’t actually know
> the true facts behind his site closing down,
> and his reasons for his being “out of touch,”
> then I would humbly suggest that you are WAY
> past the point of common decency and your
> words and tone show a callous disregard for
> others.


> I was told that prepaid subscription money
> (in some cases, multi-year subscriptions)
> had been used to cover current month’s
> The source mentioned nothing about investing
> losses and I’m sorry if my previous comment
> was misinterpreted. I don’t know anything
> about his investing.
>
> The lack of subscriber growth and renewals
> meant they could no longer keep up with
> current expenses since subscribers’ money
> had already been spent. That’s the risk
> in a prepaid business model if you don’t
> separate cash you have received but not
> yet earned.
>
> I was also told that his health was fine (by
> someone who said he spoke to John a few days
> before the site went down) and that the ISP
> pulled the plug because they hadn’t been paid
> in months.
>
> I know of at least one other creditor that…
> Callwriter… owed money to, because they…
> asked me if I knew where he was. I do not…
> and I have had no contact with him since the
> site went down.

The plot thickens…

The Mysterious Disappearance of Callwriter.com (Part 1)

Once upon a time, a man named John Brasher ran a service named Callwriter.com. As occasionally happens in the financial industry, the service was here one day and literally gone the next. I intercepted a forum thread back in March 2013 and today I begin presentation of select posts from that thread.


> Does anyone know what happened to Johnny Brasher and
> his site Callwriter.com? It disappeared a while ago now
> very quickly and all trace of him seems to have
> disappeared as well – what happened?


> It seems he had his house up for sale and there was a
> contact number (his wife I believe) for the ad. It was
> abrupt and I believe he left some people with more than
> month-long subscriptions high and dry.


> He left me high and dry. I had about six months left on
> the subscription.  Don’t know what happened.  It worked
> one day and the next the plug was pulled.
>
> Too bad, it was a really good service


> We spoke with someone close to John a couple of weeks
> after the site went down. We were told he didn’t have
> the money to keep the site up and his ISP pulled the
> plug after he was behind on paying them. We were told
> his health is fine, and we believe the decision to
> abandon the site was a business decision.
>
> In early 2012 we tried reaching John through several
> channels for a couple of months but he never
> responded. As his competitor, we’ve fielded dozens
> of calls from his former subscribers, none of whom
> were able to reach him. To our knowledge, no one got
> refunds on the unused portion of their subscriptions.
>
> [company name withheld]

This company, of course, stands to gain new
subscribers from Callwriter’s disappearance.

I will continue with this thread in the next post.

What Does It Take to Make 10% Per Year? (Part 5)

I concluded the e-mail exchange from previous posts with these thoughts:

> When I am talking about “realistic returns,” the denominator
> is total net worth. I believe this is the only way to ensure
> apples-to-apples comparison. People sometimes say things
> like “I’m trading a $50K portfolio” when $50K is what they’re
> trading but $300K is what they have to invest, for example,
> and $400K is everything they have in all asset classes.
> $400K should be the denominator for this return calculation:
> not $50K.

My compatriot, now a coach for a nationally-recognized options education company, suggested 10% annualized is pretty straightforward. She even claimed “much more” to be realistic.

I think I made a pretty convincing case that is not realistic. A 10% profit on vertical spread trades is fine but what about the losses? She did not account for those. When I start averaging in some negative numbers (losers) then I better have some outsized winners to offset those losses. Going for outsized gains increases risk of even bigger losses. On another hand, I could look to cut losers short to prevent large drawdowns. This will cut out winners too as many winning trades were once in negative territory. That won’t help me reach my goal, either.

My colleague left the door wide open to total amount of capital being traded. I like the “Superman” analogy: if you have $10M to your name then you can trade $100K like it’s peanuts. Even if you lose it all, you’ll still have $9.9M remaining. How large the account is does not matter: the total net worth does. This is something nobody divulges but at its core, this is the determining factor of how brave or risk-tolerant I will be. People often toss around lofty ROI numbers without specifying where the capital in reserve is coming from. It all must be included in the denominator, folks.

Ten percent per year… easy or difficult?

You be the judge.

What Does It Take to Make 10% Per Year? (Part 4)

Today the e-mail exchange continues between myself and another trader a few years ago on total annualized returns.

I wrote:

> If your example assumes the total net worth to be $100K such
> that $1500/month would indeed generate 18% per year then what
> happens in a losing month? You seem to gloss over by saying
> “not every trade will work,” but the losing months are a huge
> detail. If you can make 10% in some months then certainly you
> can lose 10-20% in others. Wouldn’t you also probably lose on
> higher capital requirements than you’d win because adjustments
> tend to increase margin requirements? If you adjust and don’t
> give the trade more leeway then it probably wasn’t worth
> adjusting in the first place (e.g. increased gamma risk).
> Those cards are stacked against you so making $1500/month in
> the winning months probably isn’t going to get your 18%.
> Hopefully the rest of the portfolio can help out.
>
> The other thing is that to risk $15K per month, you’re probably
> talking about 8-16 trades if you risk 1-2%/trade. Collar trades
> aren’t going to make you 10% per month so those would have to
> be included elsewhere in the portfolio. Even working full-time,
> it’s hard to manage eight (or 16!) trades per month (plus the
> rest of the portfolio) especially when the market moves fast
> and furious.

I will conclude this blog series in the next post.

What Does It Take to Make 10% Per Year? (Part 3)

Today I continue with an e-mail correspondence I had a few years ago with another trader about total annualized returns.

She responded:

> First, I think you are absolutely right to point out that when thinking
> about total return, you need to include cash held aside for adjustments.
> Maybe my use of the term “far more” was overly optimistic. It certainly
> was not very precise! I believe that 18% per year is “far more” than 10.
> So lets use 18 for a reference. Someone trading a $100,000 portfolio
> would need to make 1500 per month to reach that goal. Using only bull
> puts and bear calls that make 10% return-on-risk, you need to risk $15K
> per month to net that amount. That leaves plenty of cash for adjustments.
> Of course, not every trade will work, but 10% is the minimum I look for
> in a credit trade. That also leaves plenty of cash for longer term, less
> risky trades like collars where you can safely put more then 2% at risk.
> A careful use of margin could increase the likely returns.

I responded:

> You say “someone trading a $100K portfolio would need to make 1500 per
> month to reach that goal [18%].”
>
> Here’s my first question: what is the total net worth? I think a common
> fallacy is to quote returns on dollars traded. Making $1K on $10K is
> much different for someone who has $10K to her name than it is for
> someone who has $1M to her name. The former individual may face
> tremendous fear, stress, and sleepless nights. If the latter
> individual “lost it all” then she would still retain 99% of her net
> worth.

I will conclude with the next post.

What Does It Take to Make 10% Per Year? (Part 2)

Today I continue with presentation of an e-mail correspondence I had with a coach for a nationally-recognized options education company from a few years ago.

I wrote:

> You mentioned 2% rather than 1% so I’d rewrite that paragraph something like
> this: five 20% ROI trades would be required to make 1% on your total account.
> To make 10% you would need 25 trades. To make “far more” you would need 37-50
> trades. This assumes all trades win, however. Some trades will hit secondary
> exits and some trades will lose: some significant amounts. Remember too that
> if you budget for adjustments then your initial risk will be less than 2% so
> many of your winners will actually make less than 0.4% of your total net
> worth. Furthermore, in order to average “far more than 10% per year,” this
> needs to be achieved year after year.
>
> Does that sound realistic?
>
> When I think about books I’ve read on stock portfolios, I know some people
> talk about holding 30-100 stocks for diversification but others think that’s
> bunk. William O’Neil, if I recall correctly, recommends 5-10 stocks.
>
> I think a key question has to address what we’re allocating. Does that mean
> 5-10 stocks divided evenly into one’s total net worth? Should one’s total net
> worth be invested in stocks? There’s the rule of thumb “take 100 minus your
> age” to calculate what percentage of your net worth should be invested in
> stocks. The older you get, the more diluted your portfolio becomes.
>
> This plays into my question about your stated “much more than 10%.” How
> are you going to get much more than 10% if your portfolio is getting
> more diluted over time? If you’re 50% invested in stocks then you need
> to make at least 28% per year on stocks to get 14% on the total account.
> If the rest is cash/bonds making 4% then you’re up to 16% on the total
> account. While 16% is “far more than 10% per year,” only Warren
> Buffett [supposedly] makes 28% per year on stocks.

I will continue with her response in the next post.

What Does It Take to Make 10% Per Year? (Part 1)

A couple years ago I had an e-mail correspondence with a trader (now coach for a nationally recognized options education company) about annualized returns.  I want to present that here.

Most of the discussion is contained within the thread so I will add little else.  The one thing I will suggest is to pay close attention to the way I analyzed her argument.  When it comes to trading, lots of things sound good with regard to profits.  Because they sound good, we tend to give them a pass.  If we stop and really nail down what these statements mean or imply, though, then the wall becomes a sieve.  For this reason, I have categorized this under optionScam.com.

I wrote:

> I object to your claim that “most of the good traders here make far more than 10%
> per year” because this cannot be verified.  Furthermore, I would argue that the only
> true performance number that matters is what you make as a percentage of your
> total net worth and that is a number few people who even broadcast performance
> statistics seem to be telling.
>
> What would it take for a trader to make 10% per year? According to many purported
> risk-management specialists, no more than 1% should be risked on any trade. This
> means five 20% trades are required to return 1% on the total account. To make 10%
> on the total account I need to have 50 trades. To make “far more” than 10% I need
> 75-100 trades? Remember too, some trades will lose [lots].  Remember too that if
> I keep cash on the sidelines for adjustments, my initial risk will be less than 1%
> and many of my winners will therefore make less than 0.2% of my total net worth.
> Also realize this needs to be repeated every year in order to average “far more than
> 10% per year.”

She responded by saying up to 2% (not 1%) of the account can be risked on any given trade.

I will continue with my response to that in the next post.