Thursday, October 06, 2005

Stocks Recommended in Spam Emails

If you needed more reason to ignore spam email, here it is: Spam Stock Tracker

The author of this site tracked the performance of any stocks that he was offered in a spam email for a few months. His results were unsurprisingly horrible. In his words,

"almost ALL of those stocks I added went up a few cents max, then dropped like flies the next day."
What do those results tell you about why someone might send a spam email advertising stock that they own? How might those spammers make money off the stock if they only increase a few cents the first day and then drop sharply?

(Source: Marginal Revolution)

6 comments:

Brian Zabell said...

Yeah, I'd imagine a company or stock is in pretty bad shape if they have to resort to spam e-mail to try to get some money.

Word of advice (or common sense), take any advertisement with a grain of salt, and research something instead of blindly buying it instead.

Gregory Bylos said...

Well, a way in which they can make money is by selling their stock right after it goes up. In fact, that might even contribute to why it falls so sharply. If people see the major shareholders all of a sudden getting rid of their shares, wouldn't they do the same as quickly as possible?

Also, my idea as to why they send out spam is that maybe they are about to sell their shares already, and decide to try get them a little higher right before they sell. Although, if the stocks are only rising by a few cents before they fall, I can't imagine this getting them a lot of money.

Carl Yougndale said...

Here's my view, a view that assumes that mankind is inherently bad (pessimistic I know, sorry). Let's assume that these spammers know that the companies in which they hold stock are going belly-up (quite a few people knew long ago that Delta was going bankrupt, so this assumption shouldn't be too unreasonable). Also assuming that mankind is inherently bad, why wouldn't these people, who are already going to lose money, take as many other people down with them? If seeing other people suffer gives these spammers enjoyment, then this scenario still fits in with the whole "rational-behavior" idea behind all economics.

Gregory Bylos said...

I'm sorry Carl, but I honestly just can't see some businessman deciding to spend the time effort of hiring people to spam consumers just so that they can feel better knowing they arn't going to be the only one losing money when the companies stock drops...

Anonymous said...

Here's my idea/whatever popped into my head...I own some bad stock (a lot of it), which I bought at a low price, hoping it would turn around, but it doesn't. I spam a ton of people telling them this stock it hot, it goes up a few cents, and if the price rises anywhere above where I bought it at, I sell for a profit, albeit a small one. Wash, rinse, repeat. My assumption here is that it is not companies (unless they'd want to sell their own stock, which they might do, but probably not in as bad of shape as they are) but individuals who somehow have a ton of awful stock they want to dump. If you have the free time, you might make some money off this process of picking up terrible and cheap stock, getting the price up a little, and selling.
-Andrew Gelly

Anonymous said...

It's not exactly the most efficient way to get a quick rise in your stock just to make a small profit before its inevitable downfall, but spamming may appear useful to someone looking for a last resort to save a company's stock. Although the profit is small, if a company predicts that its stock market value is going to plummet, why not attempt, in a last ditch effort, to make as much profit as possible and then sell all the stock?

-Dysart