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Terry's Tips - A Cautionary Tale
I came across this guy several years ago while looking at different option strategies, and he has been mentioned several times on ET. He, at first, had the persona of a kindly old gent who made all the money he needed as an options trader and, as a Harvard B School grad, was a self-styled options "expert". He said he was giving most of his money to charity that he made through Terry's Tips.
I took a look at his strategies, stuff like doing call diags (selling near term against a longer term) and later 'flys or condors and put-protected spreads. He got pounded on a few big moves in QQQ and later tried to time trades with MAs. Bad move. He also setup a deal where he could trade other people's accounts for them through OptionsXpress. Another bad move. Amazingly, he ended up trading something like $14 million in accounts.
I had plenty of experience trading his exact same strategies thru the 1999-2002 Nazdak meat grinder. So I knew it could get tough going and plenty risky, and it always seemed to me like he over-leveraged and gave the risks very short shrift.
So I never used any of his stuff, but I did follow his trades. He absolutely hammered his followers with gigantic account-closing losses.
His SEC troubles have been posted on ET, but here is the complaint and link:
http://www.sec.gov/litigation/complaints/comp19291.pdf
Not passing judgement here. Just a word to the wise: You are your own Guru. Learn to trade on your own, or buy an index fund.
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF VERMONT
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
v.
TERRY’S TIPS, INC., a Vermont corporation, TERRY F. ALLEN, an individual,
Defendants.
Civil No. 2:05-cv-188
COMPLAINT
Plaintiff Securities and Exchange Commission (“Commission”) for its complaint against Terry’s Tips, Inc. (“Terry’s Tips”) and Terry F. Allen (“Allen”) (collectively, Defendants), alleges as follows:
INTRODUCTION
1. Defendants deceived investors, through false promises of unrealistic and unreasonable investment returns, into paying for Terry’s Tips autotrading program whereby the investors gave Defendants discretionary authority to trade options in the investors’ brokerage accounts.
2. Terry’s Tips is a Vermont corporation based in Vergennes, Vermont. Terry’s Tips was founded by Allen on or about May 6, 2003.
3. Allen resides in Ferrisburg, Vermont. He is the founder, owner and control person of Terry’s Tips and is a self-proclaimed stock options picking guru.
4. Beginning in 2001, Allen marketed his options trading strategies and investment newsletters through a website at www.terrystips.com.
5. In 2003, Terry’s Tips introduced a new product to its subscribers called autotrading. The autotrading program allowed subscribers to designate Terry’s Tips to automatically direct trades in the subscriber’s personal brokerage account.
6. Terry’s Tips and Allen used false and misleading performance projections to encourage subscribers to enroll in the autotrading program. Rather than achieving the high rates of return Allen advertised on the Terry’s Tips website, Allen’s trading strategies actually lost money.
7. Through the use of false and misleading performance projections, defendants convinced hundreds of clients to enroll in Terry’s Tips autotrading program.
8. Clients who subscribed to Terry’s Tips autotrading service did not achieve the advertised returns. Instead, the clients lost substantial amounts of money.
STATUTES AND RULES ALLEGED TO HAVE BEEN VIOLATED
9. Defendants have engaged and, unless enjoined, will continue to engage, directly or indirectly, in transactions, acts, practices, and courses of business which constitute violations of Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
10. Defendants have engaged and, unless enjoined, will continue to engage, directly or indirectly, in transactions, acts, practices, and courses of business which constitute violations of Sections 206(1) and (2) of the Investment Advisers Act of 1940 (“Advisers Act”) [15 U.S.C. §§ 80b-6(1) and (2)].
2
11. Defendants’ conduct occurred in connection with the purchase and sale of securities and related to clients and potential clients of Terry’s Tips.
Terry's Tips -- Past and Present
I was following Terry's trades when he had the disasters a couple of years ago. I lost a lot of money. (So did he.) Mostly on Iron Condors (where you make money if a stock closes within a tight range at expiration and lose money if it doesn't). Some unhappy investors got him in trouble with the SEC and his Autotrading was suspended at OptionsXpress.
Terry learned several lessons from that. He has changed his strategy to more than just 4 positions so that there is profitability over a wider range of stock prices. He makes adjustments as necessary so that the portfolios make money on most days. His portfolios can be autotraded at 'thinkorswim' which is a much better brokerage than OptionsXpress in many ways.
The SEC investigation was rather bogus. Autotrading is a way for an investor to follow an advisory letter's recommendations. Terry doesn't control how much each investor has in each portfolio. There are dozens of different advisory services being autotraded on TOS and OX every day.
Terry had a great year in 2006 and I resumed trading with his signals in February as a test, going to a substantial sum in May. The results have been great. Something like 30% in 6 months, which includes commissions and the three 'disasters' -- China meltdown, subprime meltdown, and the Fed's 'irrational exuberance' rate cut (a large move up is about as bad as a large move down for his strategies). He also has found that this strategy works best on index stocks (but not QQQQ). We made a ton of money in Apple, and then gave a lot of it back this summer, and now back to regular gains.
I do more management than just 'invest and watch' which has added to my profitability (in and out of portfolios more often than most of his followers, and I add trades here and there when I see the need).
It's not for the beginner (or even intermediate) options trader or faint of heart, but it can be powerfully profitable.
freedml,
It's great to hear your opinion & experiences about "Terry's Tips" tips. I'm about to subscribe to his recommendations then try to mirror his different porfolios in my IRA account.
Since there is still some skeptical feelings about his promised successes, I probably will manage these trades by myself rather than blindly let him execute through "autotrade". Did you experience big jump between his recommended prices and the quotes at the time when you want to implement these trades ?
Thanks for sharing.
Oh, this is too good.
Here it comes...
Quote from timeseller:
freedml,
It's great to hear your opinion & experiences about "Terry's Tips" tips. I'm about to subscribe to his recommendations then try to mirror his different porfolios in my IRA account.
Thanks for sharing.
Quote from stupididiot:
Oh, this is too good.
Here it comes...
autotrade
Autotrading is a tool like any other. I find it valuable. Without it, you may not get the trade alerts in a timely manner. This is especially important on expiration day. Also, you'll notice that TOS often does better than his signals indicate -- with a time delay that will vary.
As I mentioned, I am in and out of his portfolios (for instance, out right now) and I add positions where I see a need. I use his autotrading but sometimes disconnect them when I want to lighten or gradually liquidate a portfolio.
Because of the nature of the system, a large move (up or down, or several days of smaller moves) can incur a big loss. I rode it down once and am much faster to 'pull the plug' now.
__________________
freedml
Terry is great BUT be careful
I have been AutoTrading with Terry for a long amount of time..
I made a lot of money and I lost a lot of money. Overall, I am slightly down, and I have not achieved breakeven yet.
Here is the thing: Terry really downplays the risks of his portfolios. He will brag about portfolios, Yes he is right. You can make money when the stock goes up, goes down or stays flat. This is true. But when the stock moves up too fast or moves down too fast you loose a LOT of money even FASTER.
I invested in several of his portfolios, for a good amount of time. I lost A LOT of money because I had the "good" fortune to select his loosing portfolios.
Terry does not lie or misrepresent the facts about the returns of his portfolios. Every single claim he makes about spectacular gains is true. But remember.... He has a Ph.D. in marketing. He will talk forever about how he was able to make money even with big market drops, but he will be silent about his losses.
I Autotraded his Goldman Sachs portfolio. I got in at the top and rode it all the way down. He eventually liquidated the portfolio because we had lost so much. OUCH!!! Lost a lot of money there.
Same thing for Apple, I got in at the top and I left at the bottom. The Apple portfolio has rebounded. I would be breaking even if I had stayed thru. You can argue that I should not have left Apple. But you have to agree with me I was scared after what happened to Goldman Sachs.
His Google portfolio was closed flat, but it was up more than 100% several times. In other words, if you got in at the wrong time, you would have lost 50% of your money.
Remember options are leveraged investments. Your investment can be completely wiped out in hours if we have another 1987 Black Friday.
I am still a subscriber. I think that the value is incredible. For $100/month you get what other services charge $4,000 dollars. Incredible value. But it is risky and it can be incredibly rewarding, but watch out.
I do not recommend anyone who mirror the portfolios on their own. If you are not in front of a computer the whole day every day it is really difficult. If you are going to mirror a portfolio use Autotrade.
Also the broker does not charge anything for the Autotrade, as long as you pay your terrystips subscription, the only thing you have to pay are trading commissions.
Bottom line: I am a happy subscriber. I would like to come back next month and say that I am past breakeven....
Re: Terry is great BUT be careful
Quote from BR-Trader:
I have been AutoTrading with Terry for a long amount of time..
I made a lot of money and I lost a lot of money. Overall, I am slightly down, and I have not achieved breakeven yet.
Here is the thing: Terry really downplays the risks of his portfolios. He will brag about portfolios, Yes he is right. You can make money when the stock goes up, goes down or stays flat. This is true. But when the stock moves up too fast or moves down too fast you loose a LOT of money even FASTER.
I invested in several of his portfolios, for a good amount of time. I lost A LOT of money because I had the "good" fortune to select his loosing portfolios.
Terry does not lie or misrepresent the facts about the returns of his portfolios. Every single claim he makes about spectacular gains is true. But remember.... He has a Ph.D. in marketing. He will talk forever about how he was able to make money even with big market drops, but he will be silent about his losses.
I Autotraded his Goldman Sachs portfolio. I got in at the top and rode it all the way down. He eventually liquidated the portfolio because we had lost so much. OUCH!!! Lost a lot of money there.
Same thing for Apple, I got in at the top and I left at the bottom. The Apple portfolio has rebounded. I would be breaking even if I had stayed thru. You can argue that I should not have left Apple. But you have to agree with me I was scared after what happened to Goldman Sachs.
His Google portfolio was closed flat, but it was up more than 100% several times. In other words, if you got in at the wrong time, you would have lost 50% of your money.
Remember options are leveraged investments. Your investment can be completely wiped out in hours if we have another 1987 Black Friday.
I am still a subscriber. I think that the value is incredible. For $100/month you get what other services charge $4,000 dollars. Incredible value. But it is risky and it can be incredibly rewarding, but watch out.
I do not recommend anyone who mirror the portfolios on their own. If you are not in front of a computer the whole day every day it is really difficult. If you are going to mirror a portfolio use Autotrade.
Also the broker does not charge anything for the Autotrade, as long as you pay your terrystips subscription, the only thing you have to pay are trading commissions.
Bottom line: I am a happy subscriber. I would like to come back next month and say that I am past breakeven....
Re: Terry is great BUT be careful
Quote from BR-Trader:
I have been AutoTrading with Terry for a long amount of time..
Overall, I am slightly down, and I have not achieved breakeven yet.
Bottom line: I am a happy subscriber.
What a well orchestrated attempt!
I must say, when I went to the link some of the "tips" throw up a red flag off the bat.
"Double your money the lazy way"...
"The 10K strategy to double your money every year"
I suppose it may peak the interest of amateur investors but it seems like it would do the opposite with those that are a bit more sophisticated.
Re: Terry is great BUT be careful
Quote from BR-Trader:
I have been AutoTrading with Terry for a long amount of time..
Overall, I am slightly down, and I have not achieved breakeven yet.
I am still a subscriber. I think that the value is incredible. For $100/month you get what other services charge $4,000 dollars. Incredible value.
Re: Terry's Tips - A Cautionary Tale
[i]Quote from Choad:
http://www.sec.gov/litigation/complaints/comp19291.pdf
Very high emotions.....
Pekelo,
You are pretty fired up about my post. Thanks for caring so much about me and my money.
BTW, What is C2?
Yes, I am a happy subscriber, and no, I am not happy about the loosing trades.
BUT, I am still using Terry and coming back from the bottom.
Second, I understand better the risks that I had taken. There is no risk free investment, and I am using his service to select portfolios with a risk profile that matches what I am willing to tolerate.
Third. From all the time that I have been a subscriber I have tracked the performance of all portfolios, which is different from someone claiming past performance. I monitored these week, by week, and I have seen that the composite value of all portfolios has gone steadily up thru this time.
Now have you seen the advisor newsletters from Larry McMillan or Price Hadley? They do charge $4K. I guess you either need a lot of money or be willing to take a lot of risk to make this pay off.
I still think that Terry is a bargain. He had a 50% return in a portfolio last month. I would say that 50% return in a single month is braggable. Do you have anything better?
I will say right upfront: YES. I am a newbie. I am learning. Now if the BRIGHT MINDS on the forum have something to teach me, BRING IT ON!
Re: Re: Terry is great BUT be careful
Quote from Reaver:
LOL
The magic less than 10 posts combined marketing team has arrived.
Re: Very high emotions.....
Quote from BR-Trader:
BTW, What is C2?
I still think that Terry is a bargain. He had a 50% return in a portfolio last month.
Terrys results for November
Terry has 11 active portfolios using his main strategy and he has 5 others in a new strategy.
The average return of the 11 portfolios in November 2007 was 19.5%. All portfolios, except 1, have a upward bias to them. All the underlyings went down in November between 2.4% and 4.6%. So even with the market moving against his bias he still had a good month.
Of all 11 portfolios, only 1 was down for the month. It was down 2%. The underlying was down 4.1%. ( This is a very speculative and volatile portfolio)
The vast majority of the portfolios have surpassed the goal for the year.
Terry takes a lot of risk. He may not like to openly publicize his loosing portfolios. But his claims are true. And the results are real...
And, no.... I am not the marketing team, and I do not make a dime if you sign up for the service.
Re: Terrys results for November
Thanks for the info.
Quote from BR-Trader:
Terry takes a lot of risk.
Re: Terrys results for November
Quote from BR-Trader:
.... I am not the marketing team, and I do not make a dime if you sign up for the service.
Do they have any Option systems at C2?
I was not able to find a single Option system at C2.
Re: Do they have any Option systems at C2?
Quote from BR-Trader:
I was not able to find a single Option system at C2.
Re: Do they have any Option systems at C2?
Quote from BR-Trader:
I was not able to find a single Option system at C2.
I guess you could do worse than TT's. This one went from $100K to $180K to $350 (no K) in a few weeks.
http://www.collective2.com/cgi-perl...102794515578527
Terrys Tips Update: July 2008
Those of you who were skeptical of this program were right once again. Terrys Tips has suspended several auto-trade programs after massive losses in 2008. Everytime his programs do this he claims to have "learned a lesson" and comes up with yet another version of the program. Stay clear of Terry as he has proven to be a hazard to your money!
Stay Away from Terry's Tips
Been on these boards for some time, but never bothered to post. Terry's Tips is worth a post. I strongly advise staying away from Terry's Tips. Some of his strategies utilize Leaps as the underlying for selling short calls. This strategy can work in a stable/low vol environment. He pays no attention to volatility. He buys leaps when the VIX is north of 25. When vols move down so do your positions and your account - rapidly. If you want to see a grown man cry watch leaps premiums dissolve as IV moves down. Stupid strategy.
The strategies he employs are so flawed that only those who don't understand options/greeks would subscibe. Then again that's the point I suppose...
What does the SEC filing against Terry's Tips have to do with autotrading
Does anyone know why the SEC filing against Terry's Tips ( http://www.sec.gov/litigation/complaints/comp19291.pdf ), and Weiss Research ( http://www.sec.gov/litigation/admin/2006/ia-2525.pdf ) even mention autotrading? In Weiss Research paragraph 22 it says
"[Weiss Research] effectively had investment discretion to purchase and sell securities on behalf of its auto-trading subscribers"
But that's not true. The broker's autotrading department has limited power of attorney over autotrading clients, not the newsletter publishers. These days there are tons of newsletters that advertise that their newsletter can be autotraded with this and that broker... why isn't the SEC filing against them?
__________________
,\,\}{
1) 1200 subscribers x $ 20 starting price = $ 24.000 a month see ? Terry knows exactly what he is doing.
2) Funny to see happy subscribers who didn't even brake even " I made a lot of money and I lost a lot of money "...How about going to Las Vegas, you can do the same and it is more entertaining.
3) Terry had the SEC on his back and he is still in business.
4) If you knew for a fact that IBM is going up ( say you cut the CEO hair and he tells you ) If you have a strategy and it works to make money what would you do ? Tell the rest of the world about IBM or quitely placing your trades ? Ask Terry. His strategies are as good as flipping a coin, yet for a modest fee he will be happy to tell you how to make a fortune.
5) If you don't have the money or the time to trade stay out, is that simple ! There is no autotrading good enough to make money for you while you go to the beach.
6) On a personal note I admire Terry, because HE KNOWS that doesn't matter what the harsh and true reality is, there will always be some gullible gamblers who will buy his or other newsletters.
7) Terry loves gullible gamblers and so do I, it is thank to them that self proclaimed financial gurus and real traders can make a living.
8) Just want to say Thank You to the OP for writing a very interesting thread, ironically enough it will probably bring more subscribers to Terry. I already saw some very positive testimonials. Where do I sign up ?
Just got his revised book Making 36% in the mail. (free)
"Duffers guide to breaking par in the market every year in good years and bad."
It is so slick... he could teach those infomercial guys something.
He slips in his two month vacations to europe. how he gave his wife and unlimited budget for landscaping.
It is great marketing... but all you have to do is type in terrys tip and you see very quickly he has slaughtered accounts in the past.
I am a former (circa 2003-04) Terry Tips subscriber.
I can pretty much assure you he had at least a mini blowup late July into early Aug and would be willing to bet the October vertical run was no picnic for the subscribers either.
The strategies aren't complex, or bad for that matter, mainly positive theta, short gamma calendar spreads. His problem, as several have stated, is over-leverage. He'll take a 10k account and put it all-in on calendar spreads then make adjustments as the markets move, churning through commission $. Even as the account makes money due to time decay, he will re-invest those additional profits in extra spreads. In sideways chop or gentle trends he cleans up, in multi-sigma moves he gets killed. The problem is of course, when ur always all-in, the inevitable few big moves each year can wipe out many months of gains.
My advice: stay away!
Quote from bh_prop:
In sideways chop or gentle trends he cleans up, in multi-sigma moves he gets killed. The problem is of course, when ur always all-in, the inevitable few big moves each year can wipe out many months of gains.
My advice: stay away!
Trading
Regarding Terry Tips, I wish he had posted his current returns, rather than just the smooth periods of 2005-2007. I just enrolled and got to see his current returns 2011 -2012 and they are horrendous. Down more than 50% in most cases; then he eliminates the bad performing portfolios and starts a new one with a new catchy names, and starts losing again. For one, I noticed his options trades are close to ATM and so he must be whipsawed constantly and numerous adjustments. Not for me.
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