The Bull Hunters Guide

Over the last few sections of this blog, we’ve been discussing the all important topic of investment scams. Ever since the advent of the internet, anonymity has allowed con artists and scammers to have an unprecedented level of access to targeting new and susceptible investors, luring them into scams and schemes that are designed to drain their wallet and offer them little in return. Obviously, if you’re going to be involved in investing and trading online, you need to be aware of these scams and know how to spot them and avoid them.

Important points to avoid scams

Hopefully, the last few posts have given you a good idea of the kinds of schemes and tricks that are most often seen. Let’s review some of the most important points of avoiding internet scam artists.

First and foremost, these aren’t new tricks. For the most part, the schemes being perpetrated on the internet are the same old stunts that con artists have been using for decades. While the details might have been updated to take advantage of technology, the fundamental essence of the schemes hasn’t changed. This can make them easier to spot if you know what to look for.

Online bulletin boards can be a source of valuable information, but you have to be very sceptical about who to trust. It is very easy to register false accounts for use on online message boards, and this is one of the easiest ways to lure many people into a pump and dump scheme with a fake tip.

Online Investment Related Newsletters

If you subscribe to online investment-related newsletters, please be aware that the majority of them are written by people who are being paid to promote a product or service. While this can still be useful, you should be sceptical of any direct tips or advice that come from such sources.

Learn to recognize spam for what it is. Delete all suspicious mail as a matter of habit, and always check the sender’s address for validity.

Lastly, if you do encounter a scam online, be sure to contact the proper authorities. The more care we take to report illegal activity to the SEC, the sooner we can put an end to online investment scams for good.

Well, that about does it for the topic of investment scams. See you next time, when we’ll move along to another topic of interest. Until then, happy trading!

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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