Buy Low, Spam High

An anonymous reader writes "A recent study on spam has revealed that spammers see a return between 4.9% and 6% when selling stocks they have bought low and spammed the world with." From the article: "The researchers say that approximately 730 million spam e-mails are sent every week, 15% of which tout stocks. Other estimates of spam volumes are far higher. The study, by Professor Laura Frieder of Purdue University in the US and Professor Jonathan Zittrain from Oxford University's Internet Institute in the UK, analysed more than 75,000 unsolicited e-mails. All of the messages touting stocks and shares were sent between January 2004 and July 2005."

Comments

Re:Wow

[nosredna]

Not exactly. They're getting a 4-6% gain the next day, not annually. Fire them off once a week, and you're talking several thousand percent gain annually.

Re:Wow

[Golias]

It's still an attempt at market manipulation, and the SEC should come down on anybody who does this like the fist of an angry god. CEOs have gone to prison over this, you would think they could at least bitchslap these spam-and-dump traders with a hefty fine.

Re:Wow

[tnk1]

There is a certain group of people who are constitutionally unable to do something as mainstream as say, investing in solid funds to make their money. They need to feel like they are "getting the better" of others.

Spammers are usually certified losers, and few really ever actually make anything of themselves, and if they do make any money, they manage to lose it somehow by themselves, or AOL starts digging in their backyards for it.

These people you could almost feel sorry for if they weren't clogging your mail box, stealing bandwidth, trying to sell bad deals to the unwary, and underwriting organized crime by paying for use of their botnets.

On second thought... maybe I don't feel sorry for them at all.

Re:Wow

[Kjella]

Not exactly. They're getting a 4-6% gain the next day, not annually. Fire them off once a week, and you're talking several thousand percent gain annually.

Quote TFA: The team found that a spammer who bought shares the day before starting an e-mail campaign and then sold them the day after could make a return on his or her investment of 4.9%.

Now the stock market is open ~250 days/year. 1,04^250 = 18127,37 = 1812737%. Not just thousands, millions. Now that's a decent ROI for any "company".

Not a problem

[MaelstromX]

Maybe I'm out of the mainstream on this but I don't see this as an issue at all.

I don't like spam any more than anybody else does here but it's an unfortunate fact of life that is here to stay as long as we are using the current e-mail system. Getting mad at people for spamming under this system of total anonymity and lack of accountability is like getting mad at your cat for eating the food you left on the kitchen table before you left. All we can really do is find a way to deal with the spam while we think of a new way to go about things.

That said, compared to other spams this is relatively benign. Who is hurt here (besides the fact that it clogs our inboxes and spam filters, which as I said is a fact of life and is going to happen anyway)? Are we afraid that people will be tricked into buying these stocks and then lose money when they plummet? Because that sounds to me like a good way to teach people not to take financial advice from complete strangers. The law is not for babying people and shielding them from all discomfort; sometimes people need to take a lesson or two at the school of hard knocks.

You're the ideal victim for these spammers

[billstewart]

Sure, there are people who actually believe the H0t St0xx T1pZ they receive in their email, because if the saw it on the internet it must be true, but (while remembering Mencken's advice) I'd hope that they're not the majority of people who buy the stock.

People like you who *know* it's a scam and are trying to get ahead of the other suckers are an even better market - as with the Nigerian-corrupt-official scams, you not only get duped, but you're in no position to bitch about it :-) It's basically like trying to be in the early phases of a Ponzi or pyramid scam.

Unlike the other scams, it is possible to make money on this by selling short, but if the scammer's only making 4-6% on the deal, it's pretty risky, and it may be hard to get brokers willing to do short sales on worthless penny stocks without paying enough in commissions to eat up your loss. On the other hand, it should certainly be easy to collect data on this kind of thing, because if you're like me, you get a couple of new stock scam offers a day, and you could track the prices after you get them.