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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."
Well at least these email won't get me in trouble at work, unlike some of the nastier ones.
But it's scary that people are actually following any information in this spams. Unlike Nigerian scams, this at least has a hint of legitimacy, which will mean the spam floodgates will open even further.
I notice the department is "anything-for-a-buck". That will change after the singularity. I see money as being a non-issue then.
So they get about the same return as relatively safe investments and all it takes is a whole bunch of extra work and risk.
I actually get more like 50% stock stuff. It simply amazes me that no one's caught these fuckers. I mean, the money has to go somewhere, right?
Don't thank God, thank a doctor!
The stocks they pick are always crap. Unlike XFGW, that sucker is ready to POP! I'm talking 30,000% return in just a few months! Yah, baby!
After watching these a few times, I actually tried buying one of the stocks. The best chance is if you look at the stock and it hasn't risen any yet (meaning you get the email before everyone else).
I bought about $100 of a $.20 stock and wound up selling it for $.55. I've stayed away from them though usually as I seem to only look at them after the price is moving.
How much all those brokerages, analysts, and cramers make selling stocks they have bought low and spammed the world with.
Folks, that's 6% in 2 days, not 1 year. That's about 33,000% anually.
I wonder if it is against NASDQ/NYSE/etc exchange rules for a company to knowingly engage or have a 3rd party engage in unsolicited spam to promote the stock.
If it is NOT, then I think it should be. I could see how a spammer who is long or short on a stock could do this without the company knowing, but if it could be proven, perhaps it would be analogous to issuing a public statement by the company.
Thoughts?
I only came here to do two things; kick some ass, and drink some beer...looks like we're almost out of beer.
One morning I got my email right after the market openned, saw no movement... on a whim, bought a few hundred bucks worth, figuring, people stupider than me had to fall for it... Made about 20%-30% on the deal after commissions...
Haven't tried in a few years, been to busy, but it was actually pretty funny... Thought about doing that with some small money... I mean, the annual percentage gain is really impressive if you actually acted on all these and got some fast run ups...
The problem is, it's all short term, which means major taxes... Alternatively, you could do it in an IRA or other shielded account, but that means keeping in cash except when you make the play... no margin means you need to keep cash sitting around when you aren't playing, which cuts into returns... If you have margin, you can always move the cash in 2-3 days later conveniently.
Alex
As stated above, it's 6% in a day, not your annual return. Rather major difference there.
You better watch out, there may be dogs about . .
It's set to explode!
Will it be a big mover?
Don't let the inside investors beat you to it!
Ugh. It simply astonished me that language like that, which is repeated over and over again, verbatim, moves enough people to bid up stocks to the point that someone can actually see gains that matter enought (without getting them arrested instantly).
Amazing. But, 4%? Unless you're doing a LOT of it, couldn't you just mow lawns or something and make the same money while also being less fat?
Don't disappoint your bird dog. Go to the range.
Ehum? Did you really think they meant by yearly basis? No, they meant per "spam high" incident. Now, do a handful of fast ones (in a few months perhaps since it takes the regulators a while to catch on) then it might be very profitable considering the risk and punishment. Much less risky than say financing a drug deal, it's just a white collar crime. Wouldn't be surprised if some people with grey money are backers behind scams like these.
Then the next time you get one of these, you should buy the stock ASAP and also profit, along with the original spammer. This can really get out of hand.
I know this is off-topic, but you gotta check-out the picture in the article. The young hacker spammer guy in that "Scooore!" pose is hilarious! And the older non-geek guy behind him with the bewildered look emphasizes the point.
Perhaps this will inspire many would-be advisors to send spam about how to make money fast by sending spam emails about stocks. If it works, then it will inspire more spammers to send spam about how to make money sending spam about how to make money fast by sending spam emails about stocks. Depending on the success, it might spawn a whole slew of spammers sending spam about how to make money by sending spam about how to make money sending spam about how to make money fast by sending spam emails about stocks.
So the US stock market hisorically has returned over 10% a year, current yields on low-risk money market funds is over 5% and US Treasury funds historically have generated at least 5% a year as well.
So you can invest in a cheap index fund in any of the above and beat what these guys are doing. Or, you could run a pump and dump stock scam and risk huge jail time instead. This also doesn't include paying taxes on all your stock transactions which will lower your return even further. Sounds like a great deal to me.
The SEC should be able to find these people by the stock transactions pre/post stock spamming campaign. Anyone who tries doing this activity is a complete moron and is going to be caught eventually.
As pathetic as this is, I can believe it actually does work. Not that long ago, I did some on-site computer work for a guy, who in turn referred me to a couple of his friends. They were all getting into online stock trading, using some "training CD" of questionable merit.
All of them bought new computer systems, apparently with this stock trading as their primary purpose behind them. (One guy even asked me at length about his options for buying multiple flat panel monitors, thinking it would help him with his trading.)
None of them even knew the basics of how to get their computers properly hooked up to a broadband Internet connection. (That's one of the things they paid me for.)
I figured they probably overestimated the value in what they were doing, but hey - not really my problem. I'm just the computer guy for hire.
Later on, I happened to talk with a couple of them. The guy who I think got the rest of them interested, initially, told me how he was "no longer friends" with the other guys, since they had some kind of "falling out". The other guy I spoke with complained bitterly about the online stock market thing being a big "money pit" and how he lost way too much with it. He had his DSL disconnected and said he never wanted another Internet connection!
And if the price has risen recently, sell it short. It's gonna go back down to its true value eventually (probably after the spammers sell their shares).
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.
audioLibre - freedom of music
Not quite true either. Assuming these people pay taxes that will be a huge hit on their returns. For instance a US investor would get slapped with significant short term capital gains which can be in the neighborhood of 30-40+% depending on what state you live in, etc. Plus there are stock transaction fees on top of this moving in and out of the stock. Finally, there is a significant chance that the SEC may see this activity and be able to trace your recent purchase/sale and find you. Most of these stocks they're hyping are small over the counter shares with very low sales volume/liquidity. It would be very easy for an investigator to find who bought and sold at just the right time to figure out who is running the scam. Yes, this does happen with insider sales BTW and you'll get jail time for it.
Pump and dump stock scams are not new and the law knows how to deal with people who carry them out. Eventually you'll be caught and you won't be able to spend any of the money behind bars and that's assuming the SEC doesn't seize the ill-gotten assets to begin with.
Every once in a while a batch of stock spams comes in and I forward a bunch of them in a message to enforcement [at] sec.gov
I don't know if they actually do anything with the data -- within an hour I get an automatic response thanking me for the report and telling me that their investigations are confidential, and that's it.
No.. you do the opposite. You sell short the stock pumped. It's sure to FALL since they already bought it low. This would also help stop the spammers because they wouldn't make as much.
-- these are only opinions and they might not be mine.
Except that if you read the story you'll see that while the spammer makes money, buyers of the stocks usually lose. It seems that stocks typically lose 4-7% of their value on the days after the spam run. The spammers make their money by buying the day before and selling the day after; buying the spam on the same day that you see the first spams is unlikely to give you the same return.
Some people have considered shorting the stocks they see advertised on the assumption that the stocks will go down in value ("shorting" a stock is essentially making a bet that the stock will lose value). I don't think the study addresses that, but it also looks like a risky strategy: there are too many uncertainties involved, not least of which that the spammer will continue pumping out the spam (and pumping up the price) and you'll end up having to buy the stock at a higher price.
Trading in spammed stocks is just a complicated way to give spammers your money. You might do better just to write them a check and save yourself the broker's fee.
While it is interesting to see the return for the spammer, check out the return for the sucker that buys them. http://www.spamstocktracker.com/
I get 5.05% from an insured HSBC internet savings account. I can get 5.15% from various other similar companies.
.85% better than a opening a savings account at a bank?
So they spend the time and risk the legal ramifacations of sending millions of SPAM e-mails to get, at best
They're idiots.
A great way to make money during the various gold rushes in the West was to sell people the prospecting tools. Less profit per transaction, but you made money whether they succeeded or not...
So, it works. Good to know. Now use their scam in your advantage
When you recieve the spam, use the system. Wait a day or two, then buy put-options or sell short. What went up will come down, at least the same 4% probably.
Sig (appended to the end of comments I post, 54 chars)
i think its important to note that people need to actually BUY the stock for the change in price to happen. it's not as simple as spammers who get money via clickthroughs or something like that. this requires you to research a stock, goto your online trading site and actually purchase shares.
if anyone is at fault here, it's the people who are reading this spam, interpreting it as fact and purchasing these stocks.
you cant stop spammers and you DEFINITELY can't stop stupidity...
"i stand on the edge of destruction" -shai hulud
That is google's whole business plan right there.
ccalam - acoustic versions of new songs.
As I got each stock-pump spam, I'd record the ticker symbol and the date I first saw a spam for it. Then, I'd look at the stock's price after 1 week, 2 week, 4, 8, 12, and 16 weeks out. I was surprised at how consistent the results were. They'd be down to about 80% after a week or two, and then down to about 40%-60% of their value by weeks 12-16.
So, the prescribed course of action for a pattern like this is to "short" the stock... or buy "put" options on it. But, there are two problems:
- First, the volume on these stocks is fairly low... so low that, in order to make more than a couple hundred bucks, the volume *you* add is going to be on par with the (otherwise) "normal" volume. At that point, you're going to start affecting the price with your own actions.
- Second, these stocks are all so small that I wasn't able to find any options trading for them whatsoever.
Looks like I've got to keep my day job.they DO have a runner? and I SHOULD buy now?
ANCILLARY MAGNET, LLC IS A SYNDICATE
Going after these subjects also beats confiscating Jaguars and digging for spam gold... especially if they're actually making 6% in a few days, per campaign.
Who cares that spam may not be a crime in some places - securities scams of these proportions certainly are, and no less if perpetrated by eMail.
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.
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
...Why don't they just buy the shares themselves?
Isn't that where the chickens come from?
-Michael, AKA Frankie.
That was SPAM!?! The email promised great fortunes to be had with those insider tips. Man, how do I explain the 3000 dollars I spent out of her quilting fund was for generic v!@gr@ stock...
People have been posting repeatedly that you should short sell against spammers pumping and dumping penny stocks; the parent post is a very accurate warning against doing that.
--- Grow a pair, liberals... stop letting the Republicans bully you!
The stocks these spammers are touting are all "Over The Counter Bulletin Board" (OTCBB) stocks. Most, if not all, brokerages do not allow shorting of OTCBB stocks.
This is pure nonsense. If the spam scam works, the spammer gets money from someone and that someone has to be the one who receives the spam - ie, you. You could work out the model of how you lose but it's sort of self-evident beyond a reasonable. By the time you get the spam, it's too late to buy.
I've often figured that the stock would actually go down, and if I had more time I would track some of these.
If they DID go down most of the time, you might actually be able to profit by selling short whenever you got a new spam touting some stock.
If enough people sold short, the price would drop quickly and you could actually hurt the spammer.
Raw data and graphs of activity are available here: http://cyber.law.harvard.edu/stockspam/
Is that a 4.9% to 6% return per year? Per month? Per indeterminate period of time? It makes a huge difference.
This reminds me of lines like "the average home uses 10 killowatts of electricity per year."
Start making sense, Media!
If you can read this sig, you're too close.
From the article it would apppear that the return is quote per trade, so assuming a holding period (i.e., the amount of time their capital is locked up) of two days, a return of 5% over this period is equivalent to an annual return of roughly 500% ( (5%/2+1)^252), or 503.9% precisely, with 252 being the number of trading days in a year.
It's probably easiest to think of this as a very high rate deposit product that you invest in at 5% over a two day period, and reinvest every two days for entire year. Your effective return over the year is much, much higher than 5%.
A 500% return on your capital? Nice work if you can get it.
In finance, we almost always find such supernormal returns are indicative of illegal activity.
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One interesting thing about stock spam is that the spam email doesn't need to contain a link to an online shop or something where you can actually buy the advertised product. That makes it even harder to track.
(sarcasm)
Wow! A whole whopping 6%!
(/sarcasm)
I get a 5% return on my CD and I don't have to send out email and try to manipulate the stock market or do anything that might land me in jail.
2 cents,
QueenB
HDGary secures my bank
4% return on investment in ONE DAY doesn't even compare with 10% return PER YEAR.
Patrick Doyle
I mod down every jackass who puts his moderation policy in his sig. Oh, wait a sec....
What really amazes me about these replies is not the percentage of people who have gone without realizing that the 6% is a daily number, but instead the large percentage of those replying to posters having made the first mistake, and in their corrections saying something along the lines of: "No, it's 6%/day, like in 200 days of trading that's 1200%, idiot..." Umm, ok, so I saw one reply which got it right out of significantly more who were trying to correct others. Anyways, let's assume that the tax losses each day are %50 of what was gained, so our effective daily percentage gain is 3. It's farking compound interest, unless you're retarded and pull your earnings and only invest the same initial principle each day. This means at %3 per compounding period (the trading day) and with 200 compounding periods, we have Pf = Pi*(1.03)^200 = 369.35 for Pi = 1. Now if it were really a %6 daily gain (and tax was not an issue), we have Pf = Pi*(1.06)^200 = 115125.90, that's %11,512,590 annual gain (a bit better than a %6 CD). Not too shabby. I guess it's no wonder so many people fall so quickly into credit debt.
Did anyone bother to see if the spammed stock picks made money?
The idea of "jumping on the bandwagon" seems pretty risky to me. However, there is a site I found (www.stopstockspam.com) that attempts to day trade the touted stocks and earn a consistant profit. I guess its new cause the first trade happened recently. But I would be curious to see if this guy makes any money doing this and puts all of our speculation to rest.