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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.
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
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.
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.
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.
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/
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