This Is In Case You Think You Can Get Rich on Stock Tip Spam
While most people know better than to buy a stock based on a spam message, there are clearly enough suckers out there to make it worthwhile. A new study has checked in on the numbers, doing a bit more academic version of the portfolio tracker above. They found that (as you would expect) people who invest in stock that was spammed tend to lose money. However, the people (the spammers) who bought the stock a day or two before the spam tend to make a decent return (sometimes depending on how proficient they are as spammers). While this certainly fits into the “no duh” category of things for most of us, it’s still fascinating to see that there are enough gullible folks out there who actually buy stock based on spam.
Don’t be one of them.
Specifically, the BBC reports that:
People who respond to the “pump and dump” scam can lose 8% of their investment in two days.
Conversely, the spammers who buy low-priced stock before sending the e-mails, typically see a return of between 4.9% and 6% when they sell.
The study recently published on the Social Science Research Network say their conclusions prove the hypothesis that spammers “buy low and spam high”.
The researchers say that approximately 730 million spam e-mails are sent every week, 15% of which tout stocks. Other estimates of spam volumes are far higher.
My estimates of total spam volumes would be much higher too. Sometimes I think half of the volume noted comes into my mailboxes.
