Archive for Spam

The fine line between ads and spam

Here’s an article by Davis Freeberg it because it confirms my thoughts about stockpicking… if you find out about a company because of an ad, you’re probably best staying away. A healthy dose of suspicion is worth it’s weight in gold.

No AltEnergyStocks column this week… I’m trying to dig myself out after coming back from vacation. But I did catch up with my Economist reading… they now have an audio version (free to subscribers) which is great for long drives.

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Spam stocks warnings

I’ve noticed I’ve been getting a lot of hits from search engines looking for information about stocks they’ve gotten spam stock tips on, so as a public service, I’m publishing a list of stocks that I’ve gotten tips to buy from spammers recently. 

Do not buy any of these stocks because you got an email saying to they’re about to go to the moon, or making any sort of prediction of quick gains.  Spamming stocks does work (for the spammers, not the buyers.)   If you buy right after a “tip,” you’ll be rushing in with a whole bunch of other buyers at the same time, and pay too high a price.  If you get a spam, research the company, and think you must buy a bit of the company, do yourself a big favor and wait a week or two for the spam-induced frenzy to die down.  You’ll end up paying a good deal less, because when the promised gains do not materialize, many of the people who initially fell for it will sell, and drive the price down, often below where it might have been without the initial spamming.

These may be great companies, and they may be dogs, but right after you get a spam is always the wrong time to buy.

Companies about which I have received spams:

Received from 10/16 to 11/11 EGLY; FCTOA; GSNH; EQTD; MXXR; TXHE; GDKI

Received from 11/12 to 12/14 HTLJ; VSUS; AGHG; USBO; FPMC

12/14-12/17 DIAAF;VGYI; FPMC.pk; USBO

12/17-12/24 FPMC.pk; SORD; DKGR; TTEN; and (an encore from early November) GDKI.

Merry Christmas!

12/25/06-1/8/07 GCME, VMCI, LITL

1/8/7 to 1/13/7 CBFE

2/22/07: Things seem to be slowing down, but I got a blizzard of “tips” for PHYA.PK yesterday and today.

 Joshua Cyr has an interesting site dedicated to this topic.

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More on Penny Stock “Tips”

Just heard a good segment on NPR‘s All Things Considered, which ties in well to the blog post I wrote last week.  

There was also a segment on the BBC interviewing Joshua Cyr about his spam stock tracker, actually demonstrating how much money you would lose if you followed these tips. 

Check out Cyr’s blog.  He has lots of interesting posts (and comments) on this subject.  I didn’t realize that there now seem to be professional penny stock “promoters” who will promote your stock, and only charge you based on the results.

One comment I saw asked, “If spam predictably boosts prices fo a day, why don’t people just short the stock and take advantage of it?”   My response: most brokers will not let people short stocks that are not traded on an exchange, or have a price below $3-$5.  

This is one way in which short trading restrictions hurt the overall market.  If it were easy to short these stocks, spammers would be able to make a lot less profit from these techniques, and they would decline to a much more manageable level without any enforcement by authorities: the market would police itself, with traders using the spam as a tip to sell instead of buy, keeping the stock price more in line with what it would have been without the spam blitz.

Another related article….

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Penny stock “tips”

I just got a comment from “goldguru” at the Gold Stock Bull Blog. My first thought was that he was pushing a particular penny stock as part of a “Pump and Dump” scheme… Reading his post, that seems not to be the case, but caution is warranted.  He says: As always, you should do your own due diligence, especially with bulletin board stocks that carry a higher risk profile.

  That’s good advice.  While he says he does not own any Nova, there are many others out there pushing stock they do own, and caution is always warranted. 

  It was recently shown that spammers are actually able to move the price of the penny stocks they push when they send out email about how this or that penny stock is about to “explode.”  The strategy is generally to load up on some ignored penny stock, send out a bunch of spams, and then sell as all the suckers buy.  This leaves the spammers with a tidy profit, and the suckers with stock that is more likely to implode.sc.png

Check out this chart of Petrosun Drilling.  On Aug 18 I received 3 spams from people pushing this stock, saying it was about to “explode” that same day.  If I had bought on that tip, I probably would have gotten in around $1.70.  The stock is currently trading at $.91, and never got that high in the meantime.  I think I also got a spam around Aug 30, where you see that secondary little peak, but I admit I wasn’t paying close attention.

This is why I seldom recommend stocks in my blog, and when I do it’s because I like the company, but currently think it’s overpriced (e.g. Wal-Mart.)  What I’m saying is “This one’s worth watching, but don’t buy it at current prices.”  I also try to stick to stocks with high liquidity, so whatever I say won’t have much of an effect on the stock price.  If I find a stock I like in my research, I buy it for my clients and myself. 

The goal of this blog is to give you the tools to invest profitably for yourselves.  To do that well, you need to do your own research (if you’re going to use any active investing approach.)  Passive indexers can get slightly-below-average returns for very little effort, and, as unappealing as “slightly below average” sounds, it’s a lot better than the typical retail investor does.  For those of you who do not have the time or inclination to invest for yourselves, I hope to give you some insight into my methods and character, in case you or someone you know is looking for a professional to manage their money.

So don’t come here looking for stock tips, and be very wary of any stock tip you come across in a public forum.  The more people who see a tip, the less it is worth.  That’s why you’ll probably lose money following Jim Cramer’s picks, despite the fact that he seems to be (in my opinion) highly intelligent, if highly annoying.  There are just too many people following his advice.

The only useful information in the stock market is private information: things that the market is not yet aware of, or is currently ignoring.  Do your own research, pay someone who only sells his advice to a few people, or use passive index investing.

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