So after several years of being careful with my address and getting no spam as a result, I suppose I’ve slipped up somewhere. I know get four or five spams a day about stocks. Now I’m a simple stay at home mom who doesn’t play the stock market or know much about it, so I have no idea how I could have got onto a list for stocks, but the weird thing is that most of the ones I’ve accidentally opened are telling me not to buy certain stocks or to sell them by a certain date.
I just don’t understand the reasoning behind sending out a million bajillion of these messages. They are all coming from the UK (I’m in the US). I try not to even open them, but when I do it just seems incredibly dumb.
I guess I’m just rambling a bit here, but what’s the point of these?
We’ve been inundated by those stock offer spams, too. They’re hard for spam filters to block, since there’s nothing easily identifyable – all the filter sees are a couple of random words and a file with an image.
The point is what’s known as a “pump and dump” scheme. Note that the stocks are extremely cheap; they are what’s known in the stock business as “penny stocks.” Penny stocks are often intriguing because of their low price, but they’re also dangers.
The scam is this: the scammers buy up a large quantity of shares in the company at a very low price (say $0.25 a share). Then, they announce to the world (now via spam) that the stock is about to be big. They may even trade their stock back and forth among themselves on the appointed day, so the stock price goes up (penny stocks are thinly traded, so a few thousand shares can make a big move). The suckers see the stock move up and jump in. The scammers sell it to them at inflated prices – ($2 instead of the $0.50 they paid).
Once the scammers sell their shares to suckers, they take the profits. The suckers have the stock, which drops back to where it was to begin with (say, $0.25 a share). There’s no one to sell the stock to once it stops dropping, either. You may end up with a thousand shares of a stock you paid $2 for (total $2K) that are now worth $0.25 (worth $500). And it will be very hard to find buyers for those shares even at that price.
The scheme is illegal in the US. It is one reason why your broker is supposed to actively discourage you from buying penny stocks (and he’s forbidden to recommend penny stocks unless you have a history of trading in them).
I hear that they are advertisements for expensive stock tip newsletters.
The plan is: they email out millions of these tips with a random tip to either sell hard or buy hard a certain stock.
Then, they pick another stock and email to only those whom they sent the “correct” message to. Then, they pick another stock … etc.
Thus by sheer randomness, eventually they will have several hundred people who think they are geniuses if they had been paying attention to the emails and think all the emails are the same.
The point to the spammers (of anything, not just stock-related) is that out a million bajillion messages sent, .01% of the recipients will bite. If they send enough of this crap, that tiny percentage of suckers can be enough to make it worthwhile.
These particular messages are probably an attempt to manipulate the stock market. I don’t know enough about stocks to give a good explanation, but if you can predict the movement (or lack of movement) of a certain stock within a certain time frame, you can arrange to profit from it. For example, if more people try to buy a stock, the price tends to rise; if less try to sell; the price tends to drop. If you can influence such a trend, you have an advantage in coordinating your own buying and/or selling.
Chances are you aren’t being targeted because anyone thinks you have any interest in stocks. Your e-mail address somehow got on a list, and it just so happens that the user(s) of that list have chosen the stock angle. You’re just another one of the million bajillion.
That’s what pisses me off. Who are these people, and why do they make it at all worthwhile!?!? I’ve gone past blaming telemarketers to blaming those few who buy from them. If it weren’t for them, it would be a losing game and they would stop.
And I don’t understand why, when I first signed up for GMail, I had spam in my inbox within the first couple of days despite the fact that I hadn’t even told anyone my new address.
My first thought was a penny stock scam as well, but the OP mentions the spam saying NOT to buy a certain stock, or to sell it by a certain date. Is this just a reverse psychology thing?
That’s a good point. You should tell that to the people who give money to panhandlers.
(the other day, I saw a panhandler approach a young man around the university and what does he do? Reaches for his wallet. I was shocked, shocked I say.)
NEVER underestimate the intelligence of the populance at large.
I am of two minds about this. On the one hand, I think these predators should be given an automatic death sentence, to be carried out by lowering them very, very slowly into boiling water. On the other hand, I realize that if people weren’t such gullible assholes, the spammers would be gone.
That’s a classic scam, but it’s not the case here. For one thing, they’re not giving any information about themselves. Also, every single of of them (and I’ve been getting dozens of these) says “buy.” Further, for the scam you describe, there’s no need to use penny stocks. Since there are hurdles to buying penny stocks (as I pointed out, if you go to your broker and ask to buy a penny stock, he is required by SEC regulation to discourage you and make you sign all sorts of documents attestion you understand the major risks involved), it would make more sense to go with a major stock if all you were doing was saying it was going up or down.
No, this is “pump and dump” all the way.
I haven’t seen any that say to sell a particular stock, and, though you can make money short selling if a stock goes down, it doesn’t make any sense to do that, especially since the stocks are only a dollar or two.
Spam is rarely, if ever, targetted. They just send it to as many people as possible, reasoning that eventually they’ll find someone who is interested. Unlike print media, where the cost of manufacture makes it unwise to simply blanket the world and hope you find a few people who are interested, spam doesn’t cost substantially more to send to millions of extra people. I also get the stock market spam though I don’t play the stockmarket, and I get viagra/cialis/valium spam despite never buying medications online, and I have recently been getting Russian mail order bride despite not being male, single, or a potential Russian bride. Spammers go to great lengths to get email addresses and then they trade and sell them amongst themselves, but they don’t care whether you’re interested or not in what they’re selling.
I just happened to check out one of these that just showed up. There is a disclaimer at the end that is very interesting (I italicized the relevant sentences – note how they are buried halfway through the paragrapy):
They have 2 million shares of this. The current price of the stock is at $0.135. It sounds like the got these shares for nothing (maybe in exchange for work or some other deal). The shares are currently worth $270,000. They start selling these shares among themselves as bait. The price rises to $0.25 (total value now $500K). The suckers who see the rise, start jumping in. They buy shares from the scammers; the stock price rises. Now it’s up to $1 and above. The scammers sell out all their shares at an average of $1. They’ve made $2 million. Even if they bought the shares, their profit is $1.73 millions (less commissions). Not bad.
Meanwhile, all the people who bought the stock, want to sell it and take any profits. But the market is saturated; there is no one who is willing to pay $2 a share (if they were, they certainly would have bought it when it was $0.135). The stock price drops. Investors lose their investment. If you bought a hundred shares at $2, it’s not bad a loss, but if you bought 100,000 of them, it adds up.
Possibly reasonably intelligent people who are on the internet for the first time. I spent this evening teaching a woman basic (very basic) computer skills (“this is a double click, that’s an icon”, etc). She’s not dumb. She just has never wanted or needed to use a PC before. What if I got her on the net, spent half an hour showing her the basics, then went home, leaving her to her own devices? What if she then got spammed? “Your PC is unstable! For just $10.99 we can…” etc. I think that’s where the majority of your tiny fraction of a percent of people is. Let’s say I’ve been on the net for ten years. That’s 3650 days. That’s not a lot. There would be (by spammers’ standards) a significant number of people who are online in their first days or weeks, or who are possibly even receiving it as their very first ever email. I suspect that’s a big part of it.
Who would buy anything from someone who spammed them?
When an ad says something dead wrong like “Please review this contract” and then tries to sell you Vigr, who on earth would send them money? At what point don’t you see they are not trustworthy?
Thanks for the explanation. I too noticed a sudden inundation of “buy stocks” spams instead of the usual ones (porn, buy meds in Canada, viagra, etc…) and had been wondering why.