The Bull Hunters Guide

Over the last few sections, we’ve been talking about all the various security issues that can come up when dealing with online investing. While most of the techniques used to scam investors online are similar to their offline analogues that have been used for decades, things can still be tricky, especially for those who don’t have much experience yet.

Security And Exchange Commission

We’ve already talked about a few of the things that you can do to help ensure that you remain safe from online investment scams, but there’s something else that all online investors should be well aware of. Investment scams and investment fraud are serious crimes in the eyes of the federal government. They have the potential to undermine the entire economy. As such, they are taken very seriously, and an entire organization was established to help protect real, honest investors from those who would defraud them. This organization is the Security and Exchange Commission, or the SEC.

If you ever encounter investment frauds online, or if you even suspect it of being perpetrated, then you should contact the SEC as soon as possible. There are two ways to do this. The first is to register a complaint online at their website: http://www.sec.gov/complaint.shtml, or to send actual copies of the scam emails or newsletters to enforcement@sec.gov via email.

Alternately, you can write to the organization’s physical address at: Securities and Exchange Commission, Office of Investor Education and Assistance, 450 Fifth Street, N.W., Washington, D.C. 20549-0213.

Give A Detailed Description

Whichever method of contact you choose, be sure to include as much information as you possibly can about the perpetrators of the scam. Tell how you became aware of the scam, which email address sent it to you, what message board you found it on, and so forth. As for your own personal details, these aren’t really necessary, but include what you feel is essential to investigating the case.

Next time around, we’ll conclude our talks on online investment scams.

See you next week for part 6 of Investment Scams.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2008

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Investment scams aren’t limited to the fast paced interaction of bulletin boards, of course. Newsletters are another popular way to scam unsuspecting investors who are looking for a valuable tip on where to put their money next.

Newsletters Can Be A Scam

There are a lot of stock pick sites out there. Not surprisingly, each one claims to have the best strategy or formula when it comes to picking stocks. One of the most popular features of these sites is that they offer periodic newsletters, sometimes as often as one a day.

Some of these newsletters are legitimate, and actually offer the unbiased market advice that they claim to offer. However, just as many or even more of them are written by companies under the guise of a third party pseudonym to boost and promote their own stock!

Obviously, this can lead to all sorts of trouble. A legitimate company that was doing well in the marketplace through honest means would have very little reason to artificially inflate the value of their stock through disseminating disinformation in a newsletter. Any company with a future would also be wise enough to realize that this tactic is only setting themselves up for failure in the future.

In addition to the artificial inflation by paid companies, newsletters are also a popular place to run the pump and dump scam, offering what looks like a valuable tip, but is actually intended to ruin the investors who are duped into acting on it.

Newsletter Advice Things To Check

When you get an online newsletter that offers what looks like good advice, make sure of a few things. First, ensure that you actually subscribed to this newsletter. If it comes from an unknown source, you should delete it immediately, because it’s certain to be spam, and therefore certain to be a scam or at least a terrible waste of time.

Secondly, make sure that the newsletter you subscribed to accurately discloses who paid them to write it, how much they were paid, etc. Federal law requires this, so those newsletters who skirt around it are probably looking to hide something.

Lastly, proper grammar is critical. A professional newsletter might have a single typo, but it definitely won’t be full of misspelled words, use all capital letters, or endless streams of exclamation points.

See you next time when we talk about actual investment fraud.

See you next week for part 5 of Investment Scams.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2008

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The internet is set up in such a way that it’s very easy for people to gather around a common interest that they all share and form communities. The form that these communities take is typically that of a message board, or bulletin board. These are websites where users can sign up and engage in discussions on a variety of topics pertaining to their interest. So, for example, on an investing bulletin board, most of the discussions would revolve around investing.

Bulletin Boards And Scams

The internet puts us in contact with a lot more people in a given day than we would have in the course of a regular day offline. Because of this, the ratio of questionable encounters to good encounters increases quite sharply. Nowhere is this more abundantly clear than on online bulletin boards. While there might be a handful of contributors on most bulletin boards who know what they’re talking about and are there to dispense genuine advice and conversation, many people view bulletin boards as just another place to find a mark.

It stands to reason that when investors get together and talk, there’s going to be some advice given, or “hot tips” passed around. Scam artists take advantage of this by appearing to be “just one of the guys” and offering what seems like a friendly stock tip. In reality, this is a pump and dump scheme, designed to make lots of people invest in a stock, spike its value, and let the scam artists walk away with bundles.

Use Your Common Sense

Of course, bulletin boards do contain valuable and legitimate information from time to time. Not every stock tip you see mentioned on a bulletin board is a scam in the making, but you have to use your common sense. Just as in real life, you’d be wary about taking a tip from a stranger, treat people on the internet the same way. As you spend time online, remember that all those usernames represent someone who exists in reality. Observe their reactions and get a real feel for their character before you decide to believe anything they say.

See you next week for part 4 of Investment Scams

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2008

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As we mentioned last time, we’re going to talk about the various kinds of scams that you might run into the world of investing; scams designed to separate you from your hard earned cash with false promises. The internet has given the people who perpetrate these scams a new lease on life by providing them with the anonymity needed to operate in secret and the technological means to target a much wider number of people than ever before.

However, just because the technology has advanced, the basic scams themselves are still fairly old. That’s the one thing that we have going for us when it comes to spotting investment scams: there are really only a few basic types of scam out there, and they just tend to get repeated over and over. Here are the most frequently seen:

The Pyramid Scheme

This is a scheme wherein money is solicited from investors in order to pay off previous investors who are now expecting to receive a return. Of course, such a scheme will eventually implode when the money coming in from new investors is insufficient to cover what is owed to the old investors.

Pump and Dump

This is a practical wherein a group of people purchase a stock, almost at random. They buy a large number of shares, and then they go about recommending that stock to as many as they can, usually thousands of other investors. When those people buy the stock, there is a sudden spike in the value of the stock. The duped investors will lose when the spike is followed by the inevitable fall, but those in the know will sell their holdings during the high point of the stock, thus making off with lots of profit.

In general, one should also beware of trades that take place in off shore accounts, because this is usually done to avoid operating in the jurisdiction of local law enforcement. They almost always are looking to hide something.

Next time, we’ll begin to take a look at some of the schemes in greater detail, beginning with the bulletin board scheme.

See you next week for part 3 of Investment Scams.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2008

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Up until now in this blog, we’ve mostly been talking about different strategies that you can put to use to make yourself a more versatile trader. This is all well and good, but all the strategies in the world won’t do you any good if you’re so unfortunate as to fall victim to an investment scam.

Scams Are Everywhere

These types of scams are, unfortunately, all over the place. No matter how savvy you think you might be about this sort of thing, some of the scams are quite sophisticated and easy to fall for unless you know exactly what you’re looking for.

To those ends, we’re going to spend the next several entries here going over many different types of investment scams and how to keep an eye out for them. It pays to know the enemy, right?

Internet Is Popular For Scams

It should comes as no surprise when we say that the majority of the investment scams going around are perpetrated on the internet. The nature of the internet allows for a great deal of “safety” and anonymity for thieves and con artists, so it makes a popular venue for taking advantage of the unwary.

No doubt you’ve seen at least one type of scam already, if you’ve spent any time at all looking at investing online, or joined any investment discussion sites. This is the email spam scam, wherein someone invites you to take part in his or her brand new scheme for making “guaranteed” investments. They use a lot of hyperbolic language touting their new system and claim that they’ll let you in on their amazing secrets for just a few hundred dollars.

Of course these types of scams are quite transparent, but believe us when we say that they get a lot more sophisticated than this. We’ll begin our discussion next time with an overview of the different types of scams out there.

See you next week for part 2 of Investment Scams.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2008

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