Most Ridiculous Boiler Room Call EVER

Miscellaneous and Personal Stuff I Must Share
1

I get a lot of unsolicited calls from every species of vendor who wants to stick their hand into my pocket. Today I encountered the ne plus ultra of stupid, fantastical boiler room call. It started out standard but took a couple of preposterous terms.

“Hey Huerta how ya doin? This is I’m a huge scumbag cold-caller with Boiler Co. Investment Bank [investment bank, yeah right]. The reason I’m calling is we’ve got a really good investment we’ve been analyzing closely [Ph. D. economists on the case, no doubt]. The company is Kohlberg Kravis Roberts – I don’t know if you’ve heard of them, they trade under the symbol KKR [no, I’ve never heard of them, in which case I’ve lived under a rock for 20 years and have no business investing at all]. We see this stock at $18, it’s currently around $11.50 so you’re looking at a 75% profit. What I’d like to do is start you out with a get-acquainted buy in of 100,000 [sic] shares, for an all-in investment of $1.1 million. Does that sound good to you?”

I started laughing uncontrollably and blurted out – “No, it doesn’t sound good at all – has anyone ever responded favorably to that kind of proposition?”

He muttered something about “some of our institutional clients [yeah right] can approach that.”

So many questions. I know what the fundamental answer will be – it’s like construction workers whistling at girls. “It had to have worked once.” But geez.

Who are these people?

What would make them think I’d buy stock on an unexplained recommendation from a cold caller?

If I did believe the tip, why in God’s name would I need to buy it through their “nice block” when they’re recommending a freaking NYSE listed common stock that I could buy those 100,000 shares from for a $9 Ameritrade comission?"

Exactly how big would their proposed commission for the valuable service of getting me a piece of their “block” of the common stock be??

And who in the world would think I have $1.1 million to invest in a single speculative stock bet? I’m no Rockefeller, and whatever public information he used to find me and my number, would also contain my age and professional status and demographic status, which are all inconsistent with having anything close to that to toss around. I get that like any scummy bazaar trader, he started with a ridiculously high number and would have been ecstatic to horse-trade down to a quarter, or a tenth, of his opening, but still – I’ve never spent $110,000, or a fraction of that, on anything other than my place, and that’s with a mortgage.

And . . . what kind of person goes into such a stupid, horrible business, and how do they endure the constant rejection (and the almost certain disputes with anyone they do dupe into investing substantial amounts)?

No real point to this RO, but gosh, it made my head spin trying to figure out how anyone could make that phone call.

2

Institutional, sure but which institution? I’m thinking clients from the Arkham Sanitarium.

3

WAG: The wild figures of $1m+ are meant to sucker in gullible folk and make them think they’re being let in on a world of high-rolling deals. If they get hooked, the caller will let them in on a special super-introductory deal, say $10,000 or even $5,000, that will then grow their investment so next time they can make a bigger trade and before they know it they’ll be one of the million-dollar big cheeses.

4

I don’t get boiler-room calls ( :frowning: ) but if I did I’d practice up and try to imitate this respondent:

http://www.killsometime.com/videos/2309/Telemarketer-Crime-Scene

(A hilarious audio someone posted at SDMB.)

5

At least they got the name, ticker symbol, and then-current price correct. (At this moment, it’s up to 12.30 per share.)

6

Some people are undoubtedly impressed to receive a personal call about a stock offer and are unaware enough of how the business works to realize how undesirable the offer actually is.

My guess is that they’re starting with an offer of 100,000 shares but they’d be willing to sell you 10,000 or even 1,000 if you expressed an interest but weren’t able to kick in the full amount.

And while they may get rejected on 99% of their calls, the operating costs of this type of business are so low that the 100th successful call will make enough to keep it going.

7

When my receptionist gets a caller asking for me she offers to take a message. Sales people often say, “this is personal”. She then responds with, “Oh. Kayaker does not take personal calls at this number. He asks that you call his cell”.

They then come back with, “OK. I’ll need that number”.

Her reply is, “Sorry, but he says anyone with personal business that he wants to speak with will know his cell”.

Yes, I can be an ass.:smiley:

8

If the OP had made the recommended $1.1M investment when it was at $11.50/share, he would have already made ~$76,500. Who’s the sucker here!

9

I am reminded of Steve Martin’s process of “How to be a millionaire and never pay taxes:”

  1. First, get a million $, then
  2. Never pay taxes

Simple, right? :slight_smile:

10

Yep, I guess that’s part of the racket. Statistically they’re going to be “right” (for some time period) about half the time.

Hence the relentlessness of the calls and the ever-present need to hook new suckers. They need new blood to replace the people who are tired of their bad recommendations. (Even the more or less legitimate financial newsletters I subscribe to admit, without much shame, that their single biggest complaint is the barrage of come-ons that they e-mail you to always be buying something new from them).

Coffee’s for closers, I guess.

It’s just hard for me to believe this is a viable business, anymore (though I say the same thing about travel agents). The functions the broker traditionally performed had value – giving you access to the ticker, conducting and explaining research. But that’s all transparent and online now. What is the value-add in some black box recommendation of a common stock? I can see value-add (or plausible/possible value-add) in a guy cold calling you with some exotic derivative or a stock on the Hong Kong exchange that you can’t readily buy here. I can see value-add in what the newsletters do (identify an asset, be it a common stock or something more rarefied, do some research, and present the case for investing to your readers while telling them how best to price/structure the transaction). All the newsletters I read do that, and I think my $99 or whatever annual subscriptions are money decently spent. I don’t always accept the recommendations, but they give me information and ideas that I didn’t have before.

I just can’t see how this business model can be viable after about 1999.

Oh, I forgot one part of the standard shtick that every cold caller is sure to include. And this guy did. “My name is X, and I’ve been working with a lot of the other guys over at your office [and one of them referred me to you.]” I’ve begun ignoring that but in the past when challenged as to which guys they either claim some bogus salesman-client privilege, or if they can, snatch a name at random from whatever list they have you on.

11

I know nothing about this subject but couldn’t the scam be that they (or the clients they are working for) already hold a lot of the stock in question and want the price to go up. So they call a heap of people and say they think it is worth them buying $1m of the stock. The people laugh at them because they don’t have the money and anyway could buy the stock more cheaply themselves.

But the rumour has been put out there and so people do buy the stock (themselves, in smaller amounts) and so the price goes up.

The money may not be made in the way you are assuming.

12

Otherwise known as the classic “pump & dump” scam.

13

When I really, really, really needed a job I took one doing phone surveys (no selling). At the end of the call, one was to enter a disposition i.e. survey completed, refused, no one home, etc.

Well, the people that politely refused were marked as such, and the people that were really rude (one lady told me she hoped i got cancer) ALWAYS got marked down for “call back later”, usually after 9 PM.

Needless to say, I’m always polite to telemarketers.

14

Screw that. I never pay Dane-geld; if the Danes insist on coming back for a second thumping they bloody well get it.

15

Much more easily done these days on stock message boards and by blast e-mails/faxes. Individual phone calls to people (most of whom laugh them off) is a wildly inefficient way to pump and dump.

Oh, and pump and dump would be VERY hard with a stock with the market cap of KKR. It would take A LOT of trading to bump the needle on a huge company like that. For this reason, the classic pump and dumps involve penny stocks. Think start up mining companies on the Vancouver exchange and you’ll get a feeling for how this is done.