Spam Stock Tip Experiment

As readers know, I get a little hot under the collar about spammers manipulating the price of stocks.  I’ve decided to try to take a little money from them for a change…  I’ve been monitoring my spam email for a couple weeks now.   On 10/16 I received a spam recommending GDKI, on 10/17 and 10/19 I received spams pushing TXHE, From 10/20 to 10/23 I received 4 spams pushing MXXR, then one pushing EQTD on 10/24, and since then five spams pushing AUNI.

 I’ve decided to take matters into my own hands.  According to studies I’ve read, spammers tend to hit the same stocks over and over again.  I’ve placed a limit order to pick up one of these stocks after it falls when the victims of this scam realize their mistake and sell.   Looking over the charts, I placed a limit order to buy TXHE at $.063 (It’s currently at $.095 due to the spamming.)  If my order goes through, I’ll immediately place a limit order to sell around $.09, which should rob the spammers of some of their gains. 

This is an experiment, so I’m only doing it with a few thousand dollars.  The plan is to rob them of a little of their potential profit the next time they try to spam TXHE.  If I’m right about them spamming this stock again in a few weeks, I’ll have struck a blow for fair markets and pocket a nice gain (my purchase and sale should moderate price moves due to spamming.)  If I’m wrong, I’m stuck with a couple thousand dollars of a penny stock I know nothing about.

I’ll keep you informed.  If it goes well, I may try AUNI (or the next spam-of-the-week.) 

By the way, don’t try this at home, unless you can afford to lose everything you put into it.   Also note that this is not the type of thing I’d do with client money (unless specifically asked.)  I have no way of knowing that the spammers will strike again on TXHE,  my only protection is the low-ball limit order price I put in.  I could easily get caught out if this tiny, profitless company declares bankruptcy… my limit order will be triggered on the way down, and there’s no reason to assume the stock price won’t go all the way to zero.  I’ve added to my risk by telling the world what I’m doing, but I doubt spammers read my blog… they’re too busy stealing gullible investors’ money.

One further note, even if this strategy of trading off spammers works for a while, it will eventually cease working as traders do the same thing I’m doing… which is exactly what I want, because having vigilant traders buying on the way down after a spam, and selling on the way up on the next spam is the best way to ensure the spammers get the smallest possible ill-gotten gains for their trouble.

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3 Comments

  1. tomkonrad said

    Update: I’ve been playing around with my limit orders for previously spammed stocks (neither of which is TXHE… I ended up buying others… I’ll say which ones after they’ve been sold. I now have two positions in previously spammed stocks, with a total cost basis of $6800. Current value is $6050, which is pretty much expected. These stocks should continue to fall until they are spammed again, or the people who bought in response to spams have all sold. I don’t plan to buy more spam until I see what happens to these two positions. If I don’t see a new round of spam after a couple months, I’ll re-evaluate, and decide if I should just take my losses and go home.

  2. Excellent stock spam tips. Check out Qwoter.com they have a full stock spam report for public companies.

  3. Tom said

    As I said in the original entry, “don’t try this at home.”

    I just sold one of my positions, AUNI, which I had bought 2190 shares for $.63, sold at $.11. I’m also down on the other position, and while I can use the tax loss, I think I will wait until November to take it (while it’sstill a short term loss), just in case something happes before then. But I have not been seeing as much stock spam recently… I think the spam filters and people reading them are becoming a lot more aware of stock spam, so it has become less effective.

    So: net realized loss: $1172 (including comissions.) Current unrealized loss: $1990. At least I went in with my eyes open.

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