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The Anatomy of Pump n' Dump Stock Spamming
giorgiofr writes "Laura Frieder and Jonathan Zittrain have analyzed pump n' dump spam activity in their paper 'Spam Works: Evidence from Stock Touts and Corresponding Market Activity'. Unbelievably, it appears that spammers are able to achieve a 5% gain on pumped stock before dumping it, along with a dramatic increase in transaction volume of the stock. From the synopsis: ' We suggest that the effectiveness of spammed stock touting calls into question prevailing models of securities regulation that rely principally on the proper labeling of information and disclosure of conflicts of interest to protect consumers, and we propose several regulatory and industry interventions. Based on a large sample of touted stocks listed on the Pink Sheets quotation system, we find that stocks experience a significantly positive return on days prior to heavy touting via spam. Volume of trading responds positively and significantly to heavy touting.'"
I bet many or maybe even most of the people who start buying the stocks being spammed, buy them in the expectancy that the spamming will make the value of that stock rise.
;)
Thereby they reinforce this strange mafia way of making money and worst of all they make sure that loads of spam will keep on putting even more pressure on the internet.
The only sensible conclusion I am able to draw from this is that it probably will pay of to invest in the spam-filter companies
Really, this should be the easiest to crack. Someone has to take the money. Or some company which then turns it over to some person. The SEC should be busting these left and right.
As stocks are pumped and dumped, its very possibly that many day traders (not investors) make a pretty penny by exploiting the actions of those who are pumping and dumping.
;-)
For example, if I get a pump and dump spam I can buy it dirt cheap, wait a few hours or days and see it shoot up 2-5% and then at that point I can sell all my shares and make a short sell, which means I can make another 2-5% when the stock returns to its normal value or even lower after people realize they've been pump'd and dumped. Thats potentially a 10% return for a 5% movement
After reading the paper, I'm inclined to work up a little trading program that starts polling finance.yahoo.com as soon as I get a pump-and-dump spam e-mail, and buys/sells at a statistically predicted top.
I mean, the paper has about 20 pages of analysis, a couple of pages of references, and, what?, something like 15 pages of statistics. More than enough to start working a model.
668: Neighbour of the Beast
I find it hard to believe someone can't track those who benefit from these crimes.
We have to request permission before we buy & sell pretty much any listed security, just to satisfy our internal compliance people who in turn have to report to The Feds.
So why on earth is it so hard for The Feds to track who purchases larges quantities of these securities before such solicitations are made, and who conveniently dump shortly before these same shares crash? After all, we're only talking 5% here! There must be large sums of money whizzing about...
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If this paper is right, then can't people make money by shorting spammed stock? If you see a stock spam, short the stock then two days latter get rid of it. Instead of buying stock from spam stock email, short it.
If you try to anticipate stock movements based on the contents of the spam you receive, you may be investigated by the FTC, since you'd basically be performing the same investments the pump-and-dumpers would be. The information in that spam probably can't be considered public, which means you'd be technically guilty of insider trading.
I think, at this point, it'd be better to just drop all the rules and let caveat emptor.
Just because the officers at SCO haven't added this fine reading to their Amazon wish lists doesn't mean they wouldn't appreciate a few thousand copies!!!
Regardless of the type of spam, there is spam because spammers make money out of it. To be a successful spammer, you need:
- A half-convincing scheme
- Half-witted people gullible enough to be conned
To get rid of spam, get rid of the half-witted people. It shouldn't be that hard to educate computer users and explain to them that nobody will ever contact them to help them better their lives, just like nobody pop out of the blue and make their lives better in real-life. It's so simple even idiots can grasp the concept, and I fail to understand why nobody ever launched an educational campaign to explain this.
Once too few people respond to spam, then spamming isn't profitable anymore and spams disappear. The only true solution to the spam problem is a basic lesson in electronic social relationship.
"A door is what a dog is perpetually on the wrong side of" - Ogden Nash
Makes me wonder, if you shorted a stock that's being touted in a spam run, would that be considered insider trading?
I fail to see how this is different than portfolio managers offering prognostic about assets they transact in.
I've bought stocks for any number of reasons. For instance, buying stock in DRAM makers when a new version of Windows was about to be released (but not this time). Anyway, I can't imagine investing in a stock on the recommendation of some spammer. You've got to figure that at some point, the spammers will exhaust the pool of fools with cash.
[Insert pithy quote here]
Comment removed based on user account deletion
Over time someone will jump onto the other side of the trades and bring 'order' back to the market. At some point algorithmic traders will use stock spam to trigger short-sells instead of buying long, banking on the 'dump' that surely will follow riding the 'pump' upwards.
http://www.spamstocktracker.com/
Cable News channels pump stock all the time. CNN was touting Enron and Worldcom until the end. Pump and dump via spam is picked apart in detail while the cable news producers never get the attention these scum bags deserve.
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"I find it hard to believe someone can't track those who benefit from these crimes."
They don't have the time... they're too busy arresting grandmas for downloading stuff via P2P networks.
Profiting once, maybe.
Twice, well
Three times? Get the warrants and taps.
This is where "data mining" would come in. You know the stocks, you know who profited, you just have to find the connections. Even if the SEC cannot handle it, the FBI should be able to.
It could be possible to make a steady fortune from pump'n'dump.
Here's how it would work - Write an app to model the behaviour of pump'n'dump stocks. Each time a pump spam comes in, enter the ticker symbol into the app. The app would then pull the current quote and some recent history through a yahoo finance API, then monitor the price in the background. The app would also need the original email, so it can perform some classification based on email headers, type of spam (image, text etc), time of day, sender IP address and subnet etc.
When the database starts to populate, set up a few genetic algos to paper trade.
It's possible that the genetic algos, before long, will start generating reliably good forecasts and recommendations, eg "buy immediately, sell if it drops 1%, sell if it gains 2.2%", and the paper trading will start heading clear north. That would be the time to jump on with real $$.
When the app is tuned well, someone with a few tens of thousands could make a reliable 50% return or more per year, by taking small salami slices from a large number of pumped stocks. Sadly, these slim margins would exclude smaller investors, since the trade fees would eat up all the gain.
It all depends on when you receive each given pump spam. If you get it early in the mail-out cycle, you can win, just so long as you get a return and sell well clear of the dump. If you get it late in the mail-out, you could short it instead. If you can't reliably determine where you are in the spamming mailout cycle, the returns would be tighter or nonexistent. The app could guess your position in the mailout cycle by determining how much growth happens, and how long it takes for the dump, after you receive the pump.
-- In the beginning was the WORD, and the WORD was UNSIGNED, and the main(){} was without form and void...
This is a serious threat to the securities market, it can destroy investor confidence, probably much more demaging then downloading is painted to be.
The Feds should redeploy their focus from RIAA support work to track down these criminals. It is possible to follow up, that who are the shareholders, who benefited the most the investigation should link them to spam service providers. If I did similar act, using other methods, I am sure I would be charged quite quickly.
Maybe this could be the perfect reason to ban, abolish and persecute spam busineses.
deserve to lose their money. They won't forget that lesson again.
Give it a few years, it'll go the way of nigerian spams.
Nowhere did it tell me where the spammers were so I could "chat" with them.
I get heaps of these spams for some reason, but they are of no use to me. I trade Currencies on the Foreign Exchange, not stocks :D
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Supposedly, people who invest into stock bubbles at some point mostly know that it is going to crash, but they just think that they can sell to a greater fool and get out in time. These investments tend not to end well.
These pump and dump scams also sound like a greater fool theory, for everyone except for the spammers. I think you would be a fool to invest in a pump and dump stock.
Now, what if you were the founder of one of these companies ? That might be a tough choice. Sell, and risk investigation by the SEC, or hold tight, and loose what might be your last chance to benefit from your start-up.
If Nalgene water bottles are outlawed, only outlaws will have Nalgene water bottles.
1. Announce to everyone that you own UNIX. Make sure to grab a lot of media attention.
2. Sue IBM for stealing your code. Make sure to grab a lot of media attention.
3. Sell off stocks after everyone else buys, but before anyone realizes that you don't actually have any evidence that IBM stole code.
4. Profit!
GLaDOS for President 2016! "Well here we are again. It's always such a pleasure." -- GLaDOS, 2011
Disclaimer: IANAA (I Am Not An Analyst)
How't this any different than an analyst pumping a stock with an new price target before it's going to tank? Often it makes more sense to sell on a buy advice and vice versa. That's what the analysts probably do themselves too.
Bottom line: do your own homework using verifiable sources.
I assume most will not read the paper, so here is a couple of points to consider before weighing into the discussion:
* The touting is not illegal in and of itself - most touters are even including disclosures about their own activities (it is, however, one of the authors' recommendations to nail some of them for breach of CAN-SPAM)
* These are not NASDAQ or NYSE stocks, and don't behave anything like that. Those are unknown, small stocks with very small trading volumes. The touter and the people he is fooling are often making up much of the trading activity in the period around the touting. They are also "penny" stocks, which "tick" in pretty large increments (percentagewise).
* Consequently, the only people likely to benefit or hurt are the touters and the people who bought into their messages (i.e. no "innocent bystanders")
It is unclear to me that this is a problem for the regulators, at least not from the point of view of protecting the "victims". After all, people are free to make bad choices and these are not fraud cases (the authors note that this is "investor irrationality"). There is, however, a negative impact on everyone else, because this sustains high spam levels. Probably the "CAN-SPAM direction" is the regulatory way to go, rather than something more specific related to touting of financial assets.
There is an old saying that goes caveat emptor - Let the Buyer Beware.
- ..be depressed at the thought that some people go to the trouble to decode these spams and read them, and then think, "Ooh, this must be a great deal," and then buy it, thinking that if some spammer recommends it, then it must be a good investment. Or..
- ..be amused that all the activity is from people thinking, "ooh, a pump and dump, I'll try to screw over the people who buy after me," and then over half of them lose.
so I guess it's a wash.As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
There's a great page that tracks spammed stocks. While TFA shows that people who buy in before the touts start arriving make a 5-6% gain, the spammed stock tracker shows that once the spam starts showing up in inboxes, it's too late.
The guy's got records going back over 2 years. It's pretty interesting.
- Greg
Start a happiness pandemic
Doonesbury has a great take on the 419 scammers which works on this. When are we going to be able to invest in mutual funds encompassing all of the pump and dump stocks that we receive in our inbox. Take the legwork out of purchasing penny stocks for all of us :)
All this does is demonstrate a fundemental flaw in the mechanisms and operation of all stock markets. There are plenty of 'legal' mechanisms that operate in much the same way (half of the UK venture capital market), it's a broken system, it needs to be fixed.
So, if I get one of these before the stock starts to climb I should buy and expect to make about 5%?
Is that legal? Is it different than the dupes who buy it? I guess they don't dump fast enough....
My God, it's Full of Source!
OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
Just what we need: more laws!
For once, I'd like to see a problem for which someone says, "We could create a law to address this... but instead we'll just inform people that the problem exists and let law enforcement stick to real crimes."
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Stocks and share's are just another form of fiat money. Until everyone switches to gold (which is stable due to intrinsic value) this will go on and on. I predict it will get worse before it gets better.
I will have a sig when the market demands it.
I will personally do everything I can to put these crooks in jail where they belong. Here is a list of companies that have sent me an average of 50++ spams per company. Everyone associated with them is on my hit list. That means I will literally make a citizen's arrest via whatever force is necessary if I ever encounter one of the small dicked cowards who perpetrates this type of thing. VSUS.PK Wild Brush Energy Symbol: WBRS APPM.PK NanoSensors, Inc. (Symbol NNSR) MARSHALL HOLDINGS INTERNATIONAL INC(MHII.OB) TWRAQ Aeroform Metals (AFML) XNYH (the list is actually way longer than I can spend on a sunday)
"Question everything, including this!" - http://technoracle.blogspot.com/
Perhaps the way to get these people is through IRS. It would seem a highly likely proposition that the people running these P&D schemes would not be paying tax. They would more than likely keep detailed records with a nice transactions trail from their brokers and banks as well. Should be a slam dunk if IRS gets in on the game.
Don't tailgate - the end is near!
Everyone loves Jim Cramer because he's a celebrity, be he's the biggest stock pumper of all.
Gold does not have intrinsic value. Its purely psychological, just as much as stock it. It just happens to be a lot more stable.
Here you go: http://www.johncon.com/ntropix/
However, once you start earnestly analyzing the market, you'll soon realize, that it is not necessary to gamble with penny stocks, since there are enough medium and high cap stocks to work with, for better returns and less risk.
Excuse me, but please get off my Pennisetum Clandestinum, eh!
Actually, in some ways these pump and dump scams, along with 419 scams are good. By using email spam to scam more people then ever before, they are educating the masses in the most direct way you most possibly could.
...on a lottery with no winners, it's as simple as that. How do you know that there are actual winners in a lottery? If it wasn't for regulation, you'd have a paid actor up there saying he won $10mio while they actually just pocketed the money. People think the game is to find the right stock, which is sort of true but stocks aren't equal like two lottery tickets. Spamvertized stocks are like buying last week's lottery tickets, but people don't see that they're set up to be losers. They only know that you could get rich on the stock market, and they're putting money on the stock market and so they could get rich. And if it doesn't turn out well, then it was the wrong stock to put money on. Better check the inbox for more lottery offers.
Live today, because you never know what tomorrow brings
Gold has intrinsic value while money does not? Amazing! I mean, considering all of the similarities ...
... not many differences, and, when you look at it, the only reason anything has intrinsic value is because people think that is does; hence, if people think money is valuable, it will have intrinsic value. If people think gold is valuable, it will have intrinsic value. If people think that earwax is valuable, it will have intrinsic value (at least until people realize how useless it is).
Gold: Rare (because of limited supplies in nature)
Money: Rare (because of limited amount created)
Gold: Cannot do anything by itself (not edible, etc)
Money: Cannot do anything by itself (not edible, etc)
Gold: Looks shiny, attractive
Money: Looks green, smells good
Gold: Requires another person who wants it to be able to be traded for anything
Money: Requires another person who wants it to be able to be traded for anything
So
pretty sure insider trading is not the law to worry about breaking in this situation, their is certainly some other laws to worry about.
http://en.wikipedia.org/wiki/Insider_trading
you wouldn't be guilty of insider trading unless there was some closer connection between you, the company, or the company officers.
insider trading reqires at least a indirect benefit to a high level person within the company.
No they're not - they're portions of a company, which has staff, IP, assets, cash etc.
There are other financial instruments which are purely paper, eg derivatives - which have immense, highly leveraged trading volumes as the margins are very thin.
You realise the companies being pumped hardly ever have any relation to the spammer, yes? They're just poorly traded low-value stocks that spammers pick to promote via spam, then sell quickly after suckers buy the stock. The company who's stock is being pumped is usually innocent - in a way, they're being joe-jobbed by the spammers.
Remember kids, it's all fun and games until someone commits wholesale galactic genocide.
What are you talking about? The company sure as hell doesn't want Pump and Dump scams, they overall drive their share price DOWN. In fact, PHYA.PK (Physician's Adult Daycare) issued a press release denouncing the P&D scam with their name on it and vowed to hunt down the dirty crooks and bring them to justice. Seriously, those companies you mentioned are NOT associated with the spam - they lose money off it too.
For a site about things like basic rights, Slashdot users sure do like to censor "dissent".
I have a friend who works for one of the big 5 accounting firms as a Financial Securities Auditor. The wife and I had dinner at his house last night. He was telling me that one of the biggest areas of securities fraud that he is seeing right now is the pump-n-dump scams. I thought I understood it all...
The Phishers will phish usernames and passwords for brokerage accounts, or they will collect the information from personal users by means of a trojan. The criminals log into these accounts and schedule sell orders for whatever stocks they are holding, and schedule buy orders for the penny stock they are going to pump-n-dump. Then they walk away.
They execute the spam, eager traders read the spam, look at the account and see that volume of shares purchased have been bought up in the past n-hours and they jump in. The pumpers have bought their stock before hand and once the volume peaks, they dump. The account holders whose accounts were compromised are left holding the pumped-dumped stock...
The criminals are getting GOOD! They don't need to worry about transferring money out of the compromised brokerage accounts, they are stealing the money and laundering it all in the same step.
The big targets for the brokerage account takeovers are in Tiawan, the targets for the spam are American "day traders". Apparently, the Tiawanese accounts are big targets because all the business deals in China are written according to Tiawanese law, and all securities trading is handled out of there.
And it should be no big suprise that the criminal organizations behind the whole operations is the Russians.
Good security is based upon reality and common sense. Common sense is a function of having common knowledge.
who wouldv thunk it.
i care, really. regulatory bodies have nothing better to do. pump and dump, wasting my frkn tax $$$. as if bs mutual funds are any better. 100 p/e, but it'll just keep going up. $600k 3 bed 1 bath house, buy now. really, people are stupid, that's life, next.
I guess I am venting. Thanks for the info. Still - I have seen a few companies that I suspect are in on the scam. One particular one had no way to contact them either via telephone or by email and had echoed the spammer message on their website. I also noticed that they had the same IP address the email originated from.
"Question everything, including this!" - http://technoracle.blogspot.com/
From all the know-it-alls who think that they can 'short' one of these stocks to be on the 'other-side' of the gamble.
People please consider that the posters on Slashdot are NOT very good at trading. Such a lack of knowledge is quite frankly bothersome in a community where so many people analyze everything to the bitter end. Yet, when money is involved everyone thinks they have the secret to making it work right.
Tell me, exactly what brokerage do you use that allows you to short OTC, and .PK(pink sheet) stocks? For the rest of the real world, OTC and PK are legally impossible to short trade legit. One of the exceptions is if you short sell a stock that actually WAS listed and then became de-listed by the exchange it is on. The world of money and finance is as complicated and incomprehensible to most techies, as computers are to most non-techies.
Everyone likes to joke at the person who used the CD player for a cup holder, or cant figure something that comes so easily to you. Then when those people are gone, you make fun of their ignorance. Guess what, any comment about short selling one of these stocks makes YOU the person who gets made fun of when the backs turn. And deservingly so, if you knew how rediculous the comment of 'short-selling' spam stocks was, you would laugh your ass off too. Maybe as much as you did when you first heard the 'CD tray for a cup-holder' joke.
Having fun yet?
LNUX on the rise, buy it now before Netcraft declares it dead!
Tramway flogging into my question, are you why is it thirty letters down under jelly, what is it.
It pays to be obvious, especially if you have a reputation for subtlety.
As of the censusGR2 of 2000, there were 2,263 people, 885 households, and 593 families residing in the CDP.
He died on 1985 and was buried at Makam Pahlawan, a mausoleum where many Malaysian leaders were buried.
27.00% of all households were made up of individuals and 13.20% had someone living alone who was 65 years of age or older.
Instead of analog sliders and knobs, the JX-3P used a series of buttons and a single data slider for selecting parameters
#naabhaprzrag, #sverubfr-000, #agi-fcbafberq, negvpyr[pynff*=' negvpyr-ary-'] { qvfcynl: abar !vzcbegnag; }
Well, it is possible (though unlikely) that in rare circumstances, there is some collaboration - but in these cases I can only assume that the company wasn't real in the first place. Then, how do you know that the IP address wasn't fake? Read the below SMTP headers, and tell me which machine was the origin of the below email: Received: from host63-51-dynamic.3-87-r.retail.telecomitalia.it ([87.3.51.63]) by mx.google.com with SMTP id w29si3717130pyg.2007.01.21.14.59.34; Sun, 21 Jan 2007 14:59:58 -0800 (PST) Received-SPF: error (google.com: error in processing during lookup of vmvyzas@vyzaslaw.com: DNS timeout) Date: Sun, 21 Jan 2007 14:59:48 -0800 (PST) Message-Id: Received: from arabic.verizon.com (unknown [24.254.199.172]) by quake3arena.com with SMTP id EOUA4I8P6N for >; Sun, 21 Jan 2007 16:59:32 -0600
For a site about things like basic rights, Slashdot users sure do like to censor "dissent".
Grr. Was meant to pick "Plain Old Text"... here's those headers again:
Received: from host63-51-dynamic.3-87-r.retail.telecomitalia.it ([87.3.51.63])
by mx.google.com with SMTP id w29si3717130pyg.2007.01.21.14.59.34;
Sun, 21 Jan 2007 14:59:58 -0800 (PST)
Received-SPF: error (google.com: error in processing during lookup of vmvyzas@vyzaslaw.com: DNS timeout)
Date: Sun, 21 Jan 2007 14:59:48 -0800 (PST)
Message-Id:
Received: from arabic.verizon.com (unknown [24.254.199.172])
by quake3arena.com with SMTP id EOUA4I8P6N
for ; Sun, 21 Jan 2007 16:59:32 -0600
For a site about things like basic rights, Slashdot users sure do like to censor "dissent".
SYMBOL : GOOG
Don't get left in the dust on this one. We are expecting big news from this infotech player. Undervalued now; but expect it to skyrocket on Monday on a new press release. Monday may be your last chance to get a great price on this undervalued st0ck.
Recommendation: STRONG BUY
Trust me - I know how to read SMTP headers ;-)
I hate spammers. Wish we could round them all up and put them in a big hole.
"Question everything, including this!" - http://technoracle.blogspot.com/
You're missing the "dump" part, which is where those that have pumped the stock take their money and drop it like a hot rock. Many of the others will end up with stock that's essentially worthless, or at the least not worth near what it was they paid for it.
Isn't this just a dupe of this "article"?
- RG>
Hey pal, this isn't a pleasantforest, so don't waste my time with pleasantries!
Money is not always so rare.
http://en.wikipedia.org/wiki/Hyper-inflation
So, does forwarding these spams to enforcement@sec.gov do any good at all?
I patented screwing your mom. But it got revoked for "prior art."
This is the first coherent explanation I've ever read of how the pump-and-dump scammers actually do it and get the money out.
If this is really the case, seems like the way to fight it is essentially by fighting phishing and identity theft.
My bicyles
I've been saying this for a long time, but this is an unusually flagrant example. The general email spam problem is the delusion of dividing by zero. It's not that email is really free, but only that SMTP was based on a delusional zero-cost model of fair-and-balanced mutual exchanges. (Not to be confused with Faux News.) As long as email exchanges were roughly equal, the costs of email are low enough that we can pretend to ignore them, even though email does consume various resources such as network bandwidth and server storage, and most importantly our time. (How much time do you spend on email in an average workday?) The divide-by-zero spammers think nothing of sending another million spams in the hopes of finding one more sucker who will send them $27.39 cents for herbal Viagra substitute hair restorer... If you're dividing by zero, that looks like an infinite return on the investment.
This kind of stock scam is rather better, however. Basically the statistical equivalent of printing money by exploiting the greed of thousands of suckers who are hoping to catch a ride on the magic carpet. Concealed by the thousands of suckers and with a bit of discretion, the spammers themselves are just lost in the crowd. They were just some of the 'lucky' ones who 'responded' most quickly (to their own spam) and who got out at the right time--based on extensive experience on how much bounce their spam could trigger. Their a priori knowledge of the exact timing and volumes of the spam just insures that they will be among the top profiteers. Even worse, because many of the suckers sometimes 'win' by playing the game, their intermittent reinforcement conditions them to keep on helping the spammers.
Now if they put real costs on email and nailed the spammer's ISPs for their part as accomplices by making them pay for the spam, you can bet that the spammers would find it a lot harder to play the game. That's why I think we need some system like pre-paid email to actually solve the spam problem. No technical or legal or political or any other kind of solution is going to solve a fundamentally economic problem.
Punchline time: I actually admire Al Gore and think he would have done much better in the White House than Dubya. (How could he have done worse?) However, I think the spam problem is largely his fault. Gore was one of the most important politicians keeping them funded when they were developing SMTP, and because of the help of such well-intentioned people, they didn't worry about real-world economics as part of SMTP. Paved by good intentions and all that stuff...
Freedom = (Meaningful - Coerced) Choice != (Speech | Beer^2), and sad sock puppets' bad mods avail them naught.
One way to stop pump and dump scams is to have a couple people at the SEC watch some spam trap accounts. When they receive a pump and dump offer they freeze trading on that stock for a period of time. You simply don't allow people to buy and sell it. That would eliminate the opportunities for the spammers to get out of the stock after the run up and prevent people from running the stock up to begin with.
Then again, if people are stupid enough to buy a spam stock perhaps they deserve to lose their money.
Arrgghhh. Bad moderation again. I was a moderator yesterday. Damn... no points.
s p?ReportID=165431&_Type=News-Releases&_Title=Posit ive-Initial-Results-Achieved-on-Oil-Sands-Test-Wel l
p ortID=165430&_Type=News-Releases&_Title=Significan t-Oil-Sands-Indications-Achieved-on-Test-Well
This is NOT off topic. This is dead on topic.
Alas, what this illustrates is that most people do not do their due dilligence.
------------
Now I am a member of a small stock club. I have learned so much about how people think from this endvour. I would urge others to try something similar (a small stock club I mean).
What I have learned is that it is unbelievable how poor people's judgment is. If they are buying something for themselves they might analyse it to death. We've all heard of people who drive all over town looking for the best price.
But when it comes to a stock... someone steps forward and says they can make a great deal of money if they buy "XYZ" but that the train has almost left so "you better hurry", and the greed factor kicks in and its almost as if their brains shut down as they hand over their hard won sheckles.
Due Dilligence? hahahaha.
Take HAO.V (trades on Vancouver) as an example. Read the press releases. Check the press releases from MENV.PK (pink sheets).
These for instance:
http://www.habaneroresources.com/s/NewsReleases.a
http://www.micronenviro.com/s/NewsReleases.asp?Re
Check the phone numbers.
Check and see what sort of oil production they have... or the actual interest in the wells they participate in.
Check the insider trading.
All of this information is available. An hour of due dilligence and a quick trip to a bulletin board will show the facts... yet - these POS companies collectivly have market caps over $25 million bux. They trade on the TSX, pink sheets and Frankfurt.
Why don't the regulators do something about this? I don't know. Perhaps the press releases are factual even as they are misleading. Perhaps the regulators have bigger fish to fry. Perhaps there are so many of these scams going on.
Perhaps the regulators just look at it and shrug their shoulders and say to themselves that its a free market. If people don't do their homework before they invest then too bad.
In any event... I'm not too worried about the stock spam. If I were worried about it I'd make a list and simply avoid the stocks. The few percent commented on in the artical is peanutz.
Simple. Not because there are tons of gullable people, but because there are tons of greedy Stock brokers trying to get a piece of the action.
Pump n dump is all about timing. There are two things important to a stocks price. One is the amount of dividends that the stock pays out at the end of the fiscal year. The other is simple supply and demand. Dividends is only for long term investors. In the short term, it's simple supply and demand. The more you buy, the more the price goes up.
So the spammers are taking advantage of greed. They buy stock, the price goes up. The traders look and say "oohhhh a scam, better get in on the ground floor and see if I can take advantage of the scam too." The scammers then bail, and leave the traders to fend for themselves. Some of these traders make out like bandits, some get reasonable profits, many get screwed by selling to late.
The spammers are just looking for a bunch of day traders or short term investors who are as greedy as they are.
"All great wisdom is contained in .signature files"
Why would switching to gold help? Other than jewellery and a couple of specialist applications, gold isn't exactly the most useful of metals. I don't see how a gold standard is any more 'real' than shares, promisory notes, hard currency or just about anything else that you can't do anything tangible with (like eat, live in, make something out of, etc). Perhaps someone can fill me in?
Anyone who buys stock because spam tells them to deserves what they get.
They're probably operating out of somewhere that doesn't give two shits about the SEC or American financial laws.
That paper has been out for a while. I cited it a few weeks ago.
Key points:
With those numbers, it's going to turn out that this is some kid in his parent's basement. It's not a market manipulation problem. It's the buildings full of servers that have to be installed to process all the spam that cost.
Educated risk-takers would buy out-of-the-money equity-index calls, not lottery tickets. Compare the expected values!
In September of last year, I began to receive a ton of backscatter. It's then I realized one of my domains had been used by a pump & dumper. All of it p&d spam, all of it with the message contained in an image. May the bastids burn in hell. Can we call the Securities and Exchange Commission and find out the name of every buyer of this stuff?
== First cross river, then insult alligator.
All I want to know is how to block it. I've trained spamassassin with probably a hundred of these and they just keep coming. What is the best sa check to catch stock spam?
The other thing I've been having trouble catching is image spam.
I see two obvious solutions:
1) Do not allow morons access to the Internet
2) Do not allow morons to trade stocks
I vote for the number 1 as it will solve a couple of other problems as well.
I passed the Turing test.
So, let me see: Gold standard folks measure the value of their gold in dollars per ounce, and then claim that the dollars don't mean anything... So, what does that mean about the value of the gold?
wink and nod opportunism.
Before the internet, the same stock spamming took place over the telephone
The same conspiracys occur everyday in collectible auctions and have for ages. It's so well known in the collector car trade that only the rank beginner doesn't know what's going on.
Me? I stick with good solid stocks like avana, novell, and paula's periwinkle-limpet pies.
On Friday, I got a stock spam, touting some unknown company, in my mail. Not my e-mail, but my PAPER mail. It looked like a much fancier version of a standard stock spam, with charts, graphs, and a huge disclaimer at the bottom saying that they were just promoters.
This isn't the first one of these I've gotten, either. I got a similar one a few months ago. I can't imagine that stock spam is worth mailing to people via USPS, but apparently somebody can.
Gold: Rare (because of limited supplies in nature)
Money: Rare (because of limited amount created)
That's actually a very big difference right there. Not as big as the GP probably believes, but still, big.
Are you adequate?
As a financial naif, when I first heard about this problem, I immediately looked to see if I could sell short the stocks being pumped. What I found was that it wasn't possible, as far as I could tell, to short penny stocks.
Fix that, and the whole issue goes away, doesn't it?
Out of a cereal box?
You can LEGALLY short OTC and pinks, it's just not easy.
I used to work for Stratton Oakmont. I saw these scams pre-internet.
Since they are guaranteed to crash at some point:
1) Get stock spam
2) Sell a few thousand shares
3) Watch the price carefully.
4) Profit!
Organization: alphabetical, sometimes numerical or messy
Just like the spammers, they deserve death by crucifiction.
The big targets for the brokerage account takeovers are in Tiawan
I can't verify that. However, I'll note this is being used to target retirement accounts, where it is normally not possible to transfer out large amounts of money. By making the money move out of the account via an inflated stock buy, they bypass many of the common security precautions on such accounts. This victimizes the less technically savvy among the elderly.
Incidentally, the bogus login to perform the buy and sell orders are done via proxy on hacked machines.... which is how I learned about this. The FBI came by with a warrant for a machine (and the user) that one of my co-workers is nominally admin for. The nominal culprit in question was one of his users who insisted on "maintaining" their own (non-mission critical) desktop machines. Fortunately for the user, our corporate lawyer was able to slow down warrant execution on a technicallity long enough for the FBI to figure out that the user was too stupid to do this, and that his machine had been turned into a blind proxy server. (Unpatched in a year, and no AV to boot. The user's a genius at corrosion studies, but a moron at everything else in the universe, up to and including tying his own shoes.) On the bright side, my co-worker no-longer has anyone insisting on maintaining security for their own machines.
On the other hand, it's been three months, and the user's machine is STILL under lock and key in our CIO's office. Have you checked your backups lately?
I think the smart people acting on the spam emails are shorting the stocks being pumped...
"I'll have a Guinness, no wait, make that a Coors Light" -Grad student I work with, who shall remain anonymous...
Why not just use these SPAMs to figure out when to SHORT a stock instead of buy it?
Hmm.
Stock investment is simply making money because having money has value.
I see the only ethical way to make money here is by investing in a company to enable them to do what they do (if that's make products or perform services) better, cleaner, faster, more efficiently. And then there'd have to be some provisos on what the company does. So, letting someone else borrow the value of your money in exchange for some of their money.
If you're buying stock to get rich from a pump-and-dump scheme, no matter at what stage, then you're trading not on the use of your money's value but on taking money from other people.
Of course "ethical" depends on the source of your morality. For a pure darwinist I'd imagine anything goes that increases your chances of passing on your genes over those of another organism. In which case it seems that providing you get rich and don't get locked up then it's all good.
After 5 trades I had the account up to $1200. I thought this is great. I lost money on the next one by buying more shares than I could unload and got down to about $800. Then the next time I got mixed up buying so quickly and bought a few hundred shares for $20 (which equalled my commision at the time). I decided to just cut my losses and enjoy my few hundred bucks.
These stocks were always OTC and
I say all this to say, I've bought stocks for a quick buck and it can work... even for an outsider.
(the web's best ???)Is that right? That sure seems to be what you are saying. In fact, you seem to be saying that it is our duty to fuck over stupid people, am I reading you right? You are a shining fucking beacon of libertarian morality, one more reason I consider libertarians to be about as reputable as Scientologists. Yeah, the mises.org link gives it away. I hope you and your entire family get fucked over so we can all laugh at you and say, "Haha, darwinism at work. You deserved it." You aren't perfect, everyone makes mistakes, and when you do, I hope you realize you have forfeit all claims to sympathy.
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
I buy stocks based on what shows up on http://www.spamnation.info/ , then sell them quick.
Thanks. Your quick buying and selling helps contribute to the spammer getting rich too.
You're officially helping spammers profit.
Anybody got a rope?
If it's for-profit but free, you're not the customer -- you're the product (e.g., the Slashdot Beta's "audience").
I find it hard to believe someone can't track those who benefit from these crimes.
What makes you think this government has any interest in running a huge data-mining operation to try and catch white-collar criminals who do nothing but get rich by hurting small businesses and small-time investors?
I can't really think of any kind of crime of lower priority to them unless somehow a foreign government or terrorist organization is behind it.
If it's for-profit but free, you're not the customer -- you're the product (e.g., the Slashdot Beta's "audience").
Can you say pump and dump? I knew you could.
[...] Each time a pump spam comes in, enter the ticker symbol into the app. [...]
I have a better idea. When we invent that magical piece of code that reliably identifies pump spam, we just add it to SpamAssassin and forget about the whole thing.
If it's for-profit but free, you're not the customer -- you're the product (e.g., the Slashdot Beta's "audience").
Filter emails with a Message-Id header that contains the string "6c822ecf." Apparently the trojan/zombieware that sends this spew out has that string hardcoded as a part of the Message-Id it generates.
Thanks to the War on Drugs, it's easier to buy meth than it is to buy cold medicine!
And this is the very reason why these spammers should be jailed for very very long periods of time. Technically this could be prosecutable by the SEC since it is dealing with the stock market. This is artificially propping up stock values on an anticipated predictable return and if you do enough of these, you stand to make some money!
What really torques me off to no end is that these bastards are sending out this crap in JPG and GIF file formats embedded in the emails as an end means around the filters. So; you inevitably get slammed with these. I've had days go by where you can get anywhere from 10 to 20 of these and all from the same characters or group. And worse yet is that not any 2 of them will be identical. They all are pushing different small stocks from unknown and often unheard of companies or businesses.
It really sucks that crime pays in this country!
All content in this message is copyright (c) 2008. All rights reserved. RIAA is prohibited here.
I thought it was worth mentioning that merely profiting from the actual pump itself is only part of the spammers' equation with this particular type of spam.
Many spammers, on their forums, openly talk about the existence of "stock sponsors". These are brokers of one sort or another who contact the spammers to drum up the price of a victim stock. The spammers themselves may not even have actual shares of the stock, but get paid a commission based on how much they are able to manipulate the price of the victim stock.
Nobody mentions this in any of these articles. It's an even deeper type of fraud in that case because they are actively concealing the relationship between the party who is profiting from the manipulation (the sponsor) and the spammer. This is a huge legal loophole as far as I am concerned.
I agree that some kind of mandatory "hold" on all pinksheet / otc stock activity should most definitely be in place dependent on volume. It is literally impossible to miss the sharp rise in volumes for stocks which are in the midst of a spam run. Months of 1000- or 2000-size daily volumes, followed by two days of 3.5 million shares being moved, then back to the 1000-, 2000- etc.. That's not suspicious? To anyone?
Additionally, companies like eTrade and Yahoo Finance (among a zillion others) should consider some kind of "storm warning" notification on their sites, informing potential investors that a stock is in the midst of a spam run and that caution should be exercised.
Why people fall for this crap is beyond me.
SiL
-- SiL / IKS / concerned citizen
Who buys the stock? Well, Idiots(0) do - these are the people that believe the spam and think "wow! how nice of them to forward on this great opportunity." There there are the Idiots(1) - elitists who see through the spam but think everyone else is an Idiot(0). There there are the people who think that everyone is generally pretty smart, but wrong about everyone else being dumb - these are the Idiots(2) who believe everyone is an Idiot(1). I'm an Idiot(938) and that's why I buy the stock - how about you?
On a totally unrelated tangent, only Vegetarians(N) with large N are at risk of mad cow disease. Vegetarians(0) don't eat animals, Vegetarians(N) only eat up to Vegetarians(N-1). I try to stick around 1 or 2, but sometimes I eat at McDonalds, which I guess makes me a Vegetarian(50000).
The only difference between the 9-11 traders and the P&D traders is that the P&D guys most likely spent energy making the name holders of the shares hidden through some kind of proxy. --Like, "Hey buddy, here's some money. Buy the shares we tells ya and then give us back the profit. Do this little favor for us and maybe we'll consider not breaking your fingers."
Still, even with this layer of hidden-ness in place, it doesn't stop a detective from detecting. Or, sadly, from taking a fat envelope. The pattern of organized crime remains the same no matter what country you happen to be an organized criminal in.
But setting all of that aside, I have to point the blame stick at Bill Gates. If he sold an OS which could not be so easily corrupted and turned to the creation of bot-nets, then the activities of greedy people would stay in their little bubbles of misery and wouldn't taint everybody else's in-box.
Bill is a corrupt, grasping, back-stabbing jerk whose negative intent sours the world.
-FL
They're penny stocks; companies that are just barely able to squeak past the listing requirements. Investing in them is no better than gambling, so outside interference doesn't hurt any legitimate investors; there aren't any.
Guilt by association?
I do believe that cleaning out unintelligent/lazy investors is in itself a contribution - after all, you have to make WAY more than one mistakes to be screwed by pump and dump spamming - i.e. "normal" idiots don't get affected as much as "super" idiots.
As for not having sympathy - it's not libertarianism. It's just the real world. What do you expect the stock market to be, a public charity?
Sympathy has its place, just not on the stock market, buddy.
Ah, well, it's the STOCK MARKET. That makes fucking people over okay then. That's just the way it's done, eh? Nothing we can do, beyond our control, it just happens, people get fucked over, what are you going to do? The fact that it's the magical STOCK MARKET makes it all okay.
The naturalistic fallacy makes me sick. Just because something IS some way doesn't mean it SHOULD BE that way.
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
You just play for N months, rolling the proceeds into another contract on expiry. Index calls are your best bet because their replicating portfolio lies on the capital market line.
"A fool and his money were lucky to get together in the first place."
- J. Michael Straczynski
If you're against something, you must provide your alternative, otherwise you would be opposing just for the sake of it.
So, please, let us know what YOU think the stock market SHOULD BE, other than a place where "survival of the fittest" holds.
And no, saying that it "fucks people over" is insufficient, because, there are cases where people who gets "fucked" ask for it, and in a lot of those cases, "fucking those people over" would be the most logical and sane consequence, simply because, people need to know that their actions carry consequences.
There are countless examples:
1. A thief who tries to break into a house and get mauled by the a German Shepherd trained to be a guard dog.
2. Some person who keeps smoking despite of knowing that it causes cancer, guess what eventually happens.
3. Those who keeps going to McDon*lds daily and get obese, guess who's to blame.
It's the stock market, which YES, makes fucking people over okay. BECAUSE, (1) nobody is forced to enter it, and (2) those who do should know the WELL-KNOWN risk involved. Both points exactly like all the above examples.
You want more example? Think about a Casino. Everyone who enters, enters by their own will and at their own peril.
I think it should be, like all civil society, a place where JUSTICE and FAIRNESS hold. It is not legally okay to fuck over people in the stock market. Pump-n-dump and other such schemes are illegal, what part of that don't you get?
Fuck you, you evil fuck, I absolutely can not believe you are advocating such an illegal and immoral course of action.
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
While there are well known risks to the stock market on whole most people don't know that special risks apply to stocks traded off of the major stock exchanges or even those that do trade on an exchange but trade in the "penny stock" range. Even more important still is the fact that investors should not have to worry about getting screwed over because on the same day they buy a stock it is also getting pumped only to be dumped later on. Stocks are supposed to be traded on perceived value of the underlying company not on the advice of some spammer (Who by the way is breaking the CAN-SPAM act by spamming in the first place). People who pump and dump stocks belong in jail.
With a flat fee commission this problem is taken care of where you lose profit on your sell because of commission. $9.99 is nothing in when dealing with thousands of shares.
Which eye of yours has read me advocating illegal course of action? Which line? Which sentence?
I believe in JUSTICE and FAIRNESS, although being JUST and FAIR and "FUCKING PEOPLE OVER" are NOT mutually exclusive.
Until you answer my questions in the grandparent post, I call you Troll. I rest my case.
I agree with you, Bryansix, completely.
However, besides the obvious illegal pump and dump - which I strongly disagree with, there are plenty of other fair and legal ways to honestly "fuck stupid people over", such as carefull analysis before investing - in the end, you'll be technically "fuck the speculators over" because their wealth will be transferred to you.
Unfortunately, it seems that some other poster, who shall remain unnamed, is disgusted by even the fair and legal ways to "fuck people over" and simply imply that you need to have "sympathy" in the stock market, which I totally disagree with.
Okay, I see the problem. We've got different definitions of 'fuck over.' To me, it means to do something illegal. I mean, if you're playing by the rules, you aren't fucking anyone over even if you take their money. Sorry I got so irate, it seemed to me that, in the context of a story on pump n' dump scams, 'fuck over' obviously implied something at least as shady as the scam. What's your definition of 'fuck over?'
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
Please read my other post. LOL, much debate for nothing, yes, I believe we've got different definitions, so... :beer:
Yeah, even I'm not depreciation proof.
I will have a sig when the market demands it.