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Aftershock: Finding fortune in marketing doom

September 2, 2011: 5:00 AM ET

Book sales are just the tip of the iceberg for the doom-predicting Wiedemer brothers. They've managed to parlay their alarm bell into a multimillion-dollar empire.

By Brendan Coffey, contributor

FORTUNE -- Want to make money in this market? Just predict the market is just going to get much, much worse. At least that's the very profitable tack the writers of a doom-and-gloom tome, Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown are taking. The three co-authors, brothers David and Robert Wiedemer, and Cindy Spitzer, are raking in a multimillion-dollar payday by advising people to sell their homes now, cash out their life insurance policies, and dump their stocks ahead of what they predict will be 50% unemployment, a 90% stock market crash, and 100% annual inflation.

In a nutshell, Aftershock argues that a succession of bubbles have set the country on the path to ruin. First came the dotcom bubble, then the housing bubble. Now Federal Reserve market "manipulation" and the "incredible irresponsibility and bad judgment of the public sector" -- i.e. the U.S. government -- make banana republic inflation levels inevitable starting in 2012. Their advice: Sell everything, and pile into gold and inflation-linked securities.

Aftershock, now in its second edition, has spent the past month in the top five selling business books on Amazon.com (AMZN). It is the basis for a massive publicity campaign for right-leaning media outfit Newsmax, and it provides fodder for talking heads on CNN, Fox, and CNBC. All that has been good for sales -- publisher John Wiley & Sons says 200,000 copies are now in print.

But the $800,000 or so in book royalties the authors may receive (based on a standard 15% cover price royalty rate) pales in comparison to the trio's ancillary businesses: David Wiedemer told me the book is responsible for $100 million in assets flowing into Absolute Investment Management, a Bethesda, Md.-based money manager with whom the brothers partnered and where they are now managing directors. On top of that, 1,000 people have paid an annual fee of $399 to receive the Wiedemers' investment advice, a number that is growing faster as more people read the book. (Periodic exhortations to subscribe and invest with them pepper the chapters.)

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Now the brothers are branching out. Next up is a follow-up book , the Aftershock Investment Guide, due out next spring. Robert has a consulting deal with Newsmax, which is giving away copies of Aftershock to entice its own readers to subscribe to its own investment newsletters. The West Palm Beach, Fla.-based publisher claims one million people watched a recent "Aftershock Survival Summit" it hosted and publicized a few weeks ago with a full-page Wall Street Journal ad. In the video of the summit, Robert enunciates dire predictions between shots of Obama and elderly people wearing janitor and fast food uniforms. David is thinking bigger. "I'd really like to do a mutual fund," he says.

But the Wiedemers seem less ideologues than two guys who finally found a bubble they can make money from. Before the success of their book, the brothers' day jobs were heavily dependent on government largesse: They still run the Business Valuation Center, a Reston, Va.-based outfit that the Small Business Administration has paid $1.98 million since 2006 to provide financial valuations of potential grant recipients. But David says the asset management business is so successful they are "sort of phasing that down."

Robert Wiedemer

Before consulting for the government, Robert, who has an MBA in marketing from the University of Wisconsin-Madison, tried his hand running Pricesaroundtheworld.com, a dotcom-era bust. (The experience may be the source of the scorn Aftershock heaps upon Internet-era "Bubble babies" executives.) For the past eight years, he has been on the board of Proxim Wireless, a bulletin board-traded communications firm that in 2004 ill-advisedly scooped up the carcass of Ricochet, a 1990s Paul Allen effort to bring Wi-Fi to cities.

Also in the 1990s, the brothers co-founded and ran Imark Technologies, the unnamed "Nasdaq-listed company" in which David's book biography mentions he was CEO. The bio fails to note that Imark, which provided CD-Rom resources to publishing companies, went bankrupt in 1998 when a business plan to get publishers to sell CD-Rom data over the Internet foundered.

Aftershock's third co-author, Cindy Spitzer, says she ghostwrote part of the original Chicken Soup for the Soul. According to Aftershock's book jacket, she is now president of Aftershock Consultants, which provides insights to individuals and companies based on the book. Just before taking on that title she co-wrote Sex for Grownups with Dr. Doree Lynn late last year.

David Wiedemer

All of this background doesn't mean the Wiedemers might not be correct that we're racing toward a financial catastrophe. David does have a PhD in Economics from the University of Wisconsin, and the trio's first book, the far more sedate America's Bubble Economy, did point out the imbalance in the housing market. But while the Wiedemers use the claims of their first book as proof of their economic and investing prowess, it's really more correctly proof of the power of marketing. America's Bubble Economy told readers it would "look at how the bubbles are a part of the long-term evolution of the economy and society." With the new edition of Aftershock the message has gotten a lot less oblique: "There is still time to protect yourself, your family, and your business in the next global money meltdown."

The irony with selling the apocalypse is that individual investors are a fickle lot -- renewal rates to investment newsletters and advice services move in lockstep with how the market is doing. The same is true with asset management. Should the economic hell the Wiedemers predict come to pass, it would dry up all of their revenue sources. Or almost all of them. "They've always got to invest in something," notes David. "We'll get a bigger share of a smaller pie."

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