'I locked in a profit of US$1,100 in one day during the training! Thank you Mirriam - the True Guru of Financial Freedom!' - Shamsheer Ahmed, Singapore Or so goes a typical testimonial for an organisation called Wealth Mentors, a for-profit 'education mentoring organisation' that teaches people how to trade stock options. The firm's marketing is filled with similar quotes from former students, all praising the programme and talking about the money they made trading options. This is not about slowly accumulating a diversified portfolio on fundamentals-driven analysis, for long-term compounded returns of, say, 5 to 6 per cent per year. This programme is about outsmarting the market, which the pamphlet advises is 'one big game'. The seminar targets a common ambition among investors: to make money through active trading. Wealth Mentors, active in Hong Kong since 2006, takes things a step further by advocating the leveraged trade of equity options, a derivative involving fairly advanced maths and trading strategies. Options give investors the right to buy or sell a given security at a preset price (also known as the strike price). Options are tricky in that an investor is taking a view not just on the direction of the trading price of a certain security, but on the volatility at which it trades. Options typically only pay out if the volatility is high, sending the security past the strike price. They are also risky in that they often expire worthless. There is an all-or-nothing aspect to the payout. Options trading courses are common in the region. Some, such as the Hong Kong Securities Institute, give courses aimed at professional traders. But others, such as Singapore-based PowerUp Capital and AchieverLife, use similar marketing techniques to Wealth Mentors. They also feature glowing testimonials and a charismatic leader. Wealth Mentors offers four-day options-training courses in Hong Kong three times a year and four times annually in Singapore and Malaysia. Sales people, all former students, invite people to attend an introductory two-hour free seminar. After the seminar, the sales people pitch attendees on signing up for a four-day training course, which costs HK$35,000. Wealth Mentors' Florida-based chief trainer, Mirriam MacWilliams, makes no promise of instant riches, just 'a feasible trading plan along with certain money management principles', she says in the programme literature. MacWilliams says in the late 1990s she made more than US$2 million trading options, from an initial outlay of US$10,000 in just two years. Intrigued by such claims and the firm's colourful marketing, Money Post in late May dropped into an introductory seminar at the Prince Hotel in Tsim Sha Tsui. About 17 people, a mix of locals and expatriates, turned up for the two-hour session, which began with a dimming of the lights and a video intro. Set to strains of up-tempo pop music, the video displayed all the publications in Hong Kong, Malaysia and Singapore that have featured MacWilliams, and then sliced in clips of Singapore-based Channel NewsAsia interviewing MacWilliams. The unmistakable message was that she is something of a media star. The attendees were mostly middle-aged with the exception of a long-haired blond, young American man who looked like he would have been more at home on a beach in California. There was also a fair-sized contingent of middle-aged local Chinese women, who had obviously read all the literature because they seemed to know the answers to the questions given during the seminar. Who wants to make money? 'We do!' Who make better traders - men or women? 'Women!' Singaporean Tansy Fong, a former student of the programme, led the presentation. Fong gave up a teaching career three years ago to trade options full time. Her message was appealing: options-trading is the path to financial freedom, by which an investor can make profits no matter where the market turns. 'Make more money in your life not by working yourself to death but by working your money', Fong told the gathering. MacWilliams says in her official biography that she gave up her career as an executive with a bottling firm 'located outside of the United States' because the long commute and long hours wore her down. 'I was doing something that I no longer enjoyed any more... the reason why I was dissatisfied was because my job had become work. I no longer had freedom. I remember thinking, 'I want to have time. I want to become free.'' Freedom indeed is a major theme of the marketing, and MacWilliams says she found hers trading options. 'Mirriam MacWilliams originally created her trading strategies so as to trade only 30 minutes to 90 minutes a day,' says a book handed out for free at the seminar. Fong emphasises how easy it is to trade options. She says that, because of the 12-hour time difference with New York, people can set up their investments in the evening in as little as 30 minutes, and then let the trades unfold while they sleep. And the pay-off can be substantial, says the book: 'In a nutshell, options can help produce large profits with minimal risk.' Enticing, yes, but is it realistic? Robert Jones, head of financial planner FCL Advisories, says options trading can be taught. People need to understand volatility, and how this affects options pricing, but he says this can be achieved without understanding the advanced maths behind such concepts. He cautions that the market is dominated by professional traders. Retail investors doing this part time must be able to consistently beat such pros to make a profit. Tony Noto, head of Shanghai-based Noto Financial Planning, doesn't think options have a place in most investors' portfolios. He recommends using it as a hedging tool for large corporations, but most other options trading is speculation. He says most students would not succeed as options traders. He also says that there is no such thing as a high return with low risk - in fact they are directly related. 'Like the two rails of a train track, return and risk can only move in the same direction,' he says. Former students located through online chat rooms and interviewed by phone gave mixed reviews of the programme. None was willing to be named, but several said they had little success trading options as a result of the course. Wealth Mentors provides training, not investment advice, and is therefore unregulated. The Securities and Futures Commission has no say over it, for example. The SFC, however, did warn in its investor education section on its website in January 2011 that investors should be aware of the risks involved with companies offering investment training. It said investors have been disappointed by some of these courses, so buyer beware. The commission recommends that investors should approach SFC licensees not only for advice on securities trading, but also to check on the credentials as educational institutes.
