Don’t click that link

The current tidal wave of spam is overwhelmingly focused on touting penny stocks, which promise quick riches with small investments. Any sensible person knows to run from these scams, but it’s useful to get hard data proving what a bad deal these things are. Which is why I was interested when I stumbled across the Spam Stock Tracker. Although the data is slightly outdated now (last update was August 2006), the lesson is pretty clear, and adding more data would probably just increase the confidence level rather than change the overall number.

On May 5th, 2005 (05/05/05 spooky!) I set out to determine just how much money I could lose by trusting SPAM.

What if I purchased 1000 shares of stock from EVERY stock tip mentioned in a SPAM email? Could we all really be missing out on a great opportunity?

Out of 105 stocks on the list, all but three lost money; 40 declined by more than 80% and another 30 went down 100% – in other words, to zero – meaning if you bought and held, you wound up with absolutely nothing from your original “investment.”

I would imagine the percentages are about the same for sites that sell phony Rolexes and prescription drugs. If you send money to someone trying to sell you something via spam, you’re most likely to get nothing. And if you send them your credit card number, you’re likely to wind up paying for that error in judgment for a long, long time.

Technorati tags: ,

7 thoughts on “Don’t click that link

  1. I have to ask myself once again: what person in their right mind would send anyone money when they were promoting themselves in such a fashion? No one I know of does. But, again, apparently there are a fair number of people who have money lying around, burning holes in their pockets to throw at something like this.

    Most of the spam I’ve been getting lately is what I call “uncooked spam” — it’s clearly spam, but whoever set up the spambot didn’t do a competent job of it. I get subject headers with names like “$RANDOM_WORD”.

  2. Thanks for the link and review.

    I really should update my site it sounds. Just to clear a couple things up that may be confusing:

    The stocks that lost 100% are most likely stocks that changed their ticker name. They do this to not be associated with the spam sent out, to keep people confused to scam or any number of other reasons ethical and not ethical. It is difficult to keep track of them once changed and to amend the list so there is a LOT that may have value that are not shown. I had spent an hour or two a day working on it for a while and realized that it didn’t add a lot more value. What is interesting to me is just how MANY changed their ticker over the past year or two.

    The stock prices are accurate and real time (nearly) but I haven’t added new stocks as it is just overwhelming these days and the end result will not change. I really wish I made an automated process and recorded the historical data but too late for that now. ;-(

    As for who does invests in these stocks? I got a fair number of emails from people curious enough I would classify them as possibly doing it. I got other emails confirming they got burnt and looking for legal advice. I got MANY emails from people asking me how to short the stocks. Of course, anyone taking financial advice from me is in for trouble.


  3. I also wondered about shorting the stocks, if they are “guaranteed” to go down…

    Not about to try it, but interesting for someone who has money to burn.

  4. If there were that consistently bad, then he should have shorted them and made a nice return 🙂

  5. My understanding of selling stocks short is that it isn’t as easy as it’s cut out to be, especially for penny stocks like these, which are thinly traded. On a major exchange, you actually have to find someone who owns the stocks, borrow them, and then buy them back at a new, presumably lower price when you return them later. For thinly traded stocks, you might not be able to find any shares to borrow, and you might not be able to sell them when you want to. And you risk enormous losses if a stock you sell short actually goes up astronomically, as would be the case if a small company were to be purchased by a big legitimate Fortune 500 company.

    Anyway, these stocks, which are typically traded on the pink sheets, are not usually available for short selling through any broker, precisely because they are so easy to manipulate. If you want to take a risk, you have to take it on the long side.

    That’s my understanding, anyway, after talking to some folks who know much more than I do about this stuff.

  6. I heard about this for some time but have just filtered the emails. I like the Spam Trader Link.

    I take it Anti-Phishing will not do anything for these emails since they can simply link directly to a legitimate online stock trader where you can buy the stock?

    We have got to the point now where we are having to protect people from themselves, which may be impossible. Look at all the people that play the lottery, gamble in casinos and buy into informercials. It may be a losing battle while the guys who come up with these pure genius scams laugh all the way to the bank.

  7. Andrew, they don’t link to anything., They count on suckers going to their own online or offline broker. It’s the perfect crime in many respects.

Comments are closed.