Investment Scams, Part Four
Tuesday, October 14th, 2008
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







The
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.
Lately, we’ve been talking a lot about short selling in this blog. In particular, we’ve been talking about the
Last time in this blog, we started discussing the
Of course, for all these claims of being bad for the market, there is one aspect of short selling that undeniably makes a contribution to the market that can’t come from anywhere else. It provides a sense of liquidity to the market, keeping trades fluid, and while it tends to drive down the
Over the last few entries, we’ve taken quite a detailed look at the process of
Lastly, short selling automatically involves the practice of trading on margin. This entails the use of borrowed money, which is a risky proposition in and of itself even without the added dangers of short selling stacked on top of it. You might fall prey to sudden margin calls even, which is one of the most disastrous things that can befall a trader. Even if you’re right, it might take quite a while for your stock to decrease in value, and in the meantime, you’ll be sitting on short sold stocks bought on margin that are increasing in interest and ultimately costing you money.


