Monday, April 22, 1996
The Garzarelli Edge
by David Gardner

Of all the Wizards of Wall Street, none has capitalized on the gooroo craze quite like media-fave Elaine Garzarelli. Hey, she "called" the 1987 crash, remember? Nine years later Ms G. is still cashing in on that one, and her latest sales pitch just might appear in your mailbox any day now.

"THE GARZARELLI EDGE."

Anybody else get this thing?

Now, I get junk mail pushing new investment "products" from time to time. . . yeah, I'm on the lists, too. Only problem is, the people sending it to me don't realize that I'm going to put their stuff up on our national online service (hehehe).

"Announcing a breakthrough for individual investors," the pitch begins. "THE GARZARELLI EDGE." It's a 20-page full-color pamphlet promoting, among other things, Ms. Garzarelli's "proven, scientific system that has produced average yearly gains of 20.2% since 1982!" (She'd better hope that her readers never learn about the Dow Dividend approach, or Investing for Growth.) What the missive actually does, of course, is deliver a finely honed mix of gibberish designed to hook the inexperienced investor into religiously buying into the Gooroo-Knows-Best theme.

Long-time Fools will bring two key bits of information to all this. The first is that we don't think ANYONE can consistently, accurately call the movements of the stock market; that it's a complete waste of time driven on by financial journalists, most of whom don't actually know much about the market, or even invest in it. And second, we consider the job of Market-Timin' Gooroo to be among the best and most coveted in our fair American fields.

That's right, an enviable position. Where else can you get paid for giving advice that no one will ever hold you accountable for? Surgeons can't do it, my dear Fools. Neither can tax accountants, clergy, or parents. But if you're a Market-Timin' Gooroo, you can call the market perfectly AT EVERY TURN. . . or at least claim to in your marketing literature. ("Over the last 14 years THE GARZARELLI EDGE has correctly forecast every major turn in the U.S. stock market. EVERY SINGLE ONE, BAR NONE!") It wouldn't do, of course, to ever admit you were wrong, even once, just a tiny bit about anything.

The real secret to success as a Market-Timin' Gooroo is to constantly prognosticate about the market's direction, and to constantly do so out of both sides of your mouth.

"I've always said that the stock market is very, very unsafe, unless you work very, very hard to take the risk out," says Ms. Garzarelli. "That's why the stock market can be the fastest way to lose money this side of Las Vegas." (Good line. Market's just like Vegas. That plays in Peoria.) "I know dozens of private investors who have lost thousands upon thousands of dollars by trusting ill-conceived advice about 'sure things' in a so-called bull market. Today, the danger is extreme."

Interesting. OK, let's flip a page or two in:

"RIGHT NOW ALL MY INDICATORS POINT TO HUGE PROFITS AHEAD (yet sadly, most investors will miss out). I say this unequivocally."

That's good. "Unequivocally," eh? Given the "extreme danger" we just read about, this is priceless.

"And I back it up with 14 years of unmatched market calls---you should be invested 100% right now!"

Given the juxtaposition of the first statement ("extreme danger") with the second ("HUGE profits ahead. . . you should be invested 100% right now!"), we see that Ms. Garzarelli and her copywriters have reached true virtuoso status in the high circles of Market-Timin' Gooroodom. Have to have both sides of the hedge well trimmed , of course, and they do. . . this is outstanding timing work.

"Now don't get me wrong," Elaine hedges on. (Wait, I bet the sales pitch is coming!) "There are still ways to make a great deal of money in 1996-- but YOU MUST FIRST TAKE THE RISK OUT!" (The mantra repeated again. Sounds so easy by now.) "And to do that, you must be able to separate fact from sales pitch."

That's exactly what I did when I then dispatched this "sales pitch" to the confines of my wastebasket.

But I can't quite let it go there. Those guys over in market research seem to have located the sound byte that the masses will react to most strongly: "TAKE THE RISK OUT!" That's a great one. As self-admitted Fools, one of OUR sound bites is, "The greatest, least-mentioned risk of all is not taking enough risk." Our problem is that we weren't relying on market research with that line, but instead on our own hearts. So I guess we're screwing up.

No surprise, perhaps, that the whole Garzarelli offer is pitched as a "no risk" trial subscription.

Without irony intended (or so it seems), the pamphlet ends by asking the reader to take advantage of the so-called "BEST VALUE" option: $269 for GARZARELLI for two years. Of course, that's the BEST VALUE for the publisher (Phillips Publishing in Potomac, MD), not necessarily for the typical Fool.

OK, this sort of drivel does play well---for a while---to a society whose investment know-how has been dumbed down by (1) poor financial media, (2) a Wall Street formerly able to "corral" most of the good info in its own 40-story fortresses, and (3) the massive educational void created largely by items (1) and (2). But the factors that make stuff like "THE GARZARELLI EDGE" possible are now quickly diminishing and disappearing. Intelligent investors are learning to ignore the increasingly strident wisdom of the fading old media ("But Barron's panned Iomega a couple months ago!" I can hear the astonished Barron's subscriber cry as, feeling betrayed, he sees the stock up about three times since Abelson's forgotten---Abelson HOPES forgotten---column).

And Wall Street is finding it can't "hide" the info anymore. Whereas companies used to admit only Wall Street analysts to their conference calls, most of the ones that matter are now getting reported on and summarized right here in The Motley Fool. Our readers then go on to discuss and debate the company in our message boards, the most intelligent public exchange of info I've found anywhere. Equal info, fairly distributed, about what's happening this week, right here, right now.

Somebody somewhere needs to let the advertising copywriters know. Maybe then they won't keep writing stuff so easy to ridicule, and touting GARZARELLI EDGE-type products that are so clearly inferior to:

* Thinking for yourself

* Ignoring the gooroos

* The Dow Dividend approach

* The amazing financial info now online

OK, OK, I'm hopping off the soapbox now. Sorry, but junk mail just does this to me, and my wastebasket is filling up.

Transmitted: 4/22/96