Are “Hot” Stock Tips Really Hot?

Today’s issue contains four Snippets:
– “Hot” Stock Tips: Ever Wonder What Would Have Happened if You Had Bought Those Stocks That Are “About to Skyrocket”?

– Some Good News About Phishing Scams

– New Credit Card Pitches: Be Wary

– Some Excellent Emergency Preparedness Tips From Subscribers

Before we get started on these Snippets, we wanted to let you know about a new website we created last week, and a new Mini-Course we’ve developed that thousands of subscribers have requested.

“Hot” Stock Tips: Ever Wonder What Would Have Happened if
You Had Bought Those Stocks That Are “About to Skyrocket”?

Have you ever wondered if you’re missing out on a great investment opportunity by NOT investing in the “hot” stock tips you receive in your e-mailbox?

Joshua Cyr decided to find out. On May 5, 2005, he decided to track what would happen if he purchased 1000 shares of every stock for which he received a hot stock tip via spam.

Naturally, he didn’t actually waste money on this experiment.

Instead, he just pretended to buy the stocks and kept track of their value on a website he created (so he never actually bought the stocks). He simply tracked what would have happened if he had actually purchased these stocks based on the stock tips.

Joshua expected that he’d get temporary, short-term windfalls on all these stocks and then see big losses.

What he found instead surprised him. Almost ALL of the stocks went up a few cents at most, and then dropped dramatically the next day. So, no short term windfalls.

Joshua tracks the stocks real time at his site, so you can see how he’s doing at any moment.


As we write this, he would have spent $17,405.00 to buy the stocks, and their current value is $9,897.90. That’s a net loss of $7,507.10 — or 43%!

Joshua didn’t lose any money — he was just pretending. Unfortunately, the people around the world who actually bought these stocks on the “hot” stock tips they received did lose money.

Naturally, the scammers who send out these emails often make money. This type of scam is called “pump and dump,” and it’s the most common type of investing scam.

Here’s how it works: Scammers buy shares of a thinly-traded stock at a low price. They then praise the stock via email (or other means), and they often claim that they have special, secret information that they are sharing with you.

When people buy the stock based on this supposed stock tip, the price of the stock is artificially “pumped” up.

The scammers then “dump” the shares they own, driving the stock back down. The people who bought at the higher prices usually lose money when they sell.

The SEC catches some of these scammers. However, it’s next to impossible to regain the money you lost.

Action: NEVER buy stock based on a hot stock tip from spam or based on what you read on the investment message boards or chat rooms. The chances are excellent that it’s a scam. And now you have Joshua’s experiment to confirm you are NOT missing a great opportunity. 😉

For more tips on investing safely, click here.

Some Good News About Phishing Scams

Finally — some good news on phishing scams: According to the Anti-Phishing Working Group (APWG), the number of days a phishing site remains online has dropped to an average of only 5.5 days, signaling that countermeasures against these fraudulent sites are happening more quickly.

For the second consecutive month, the number of new phishing campaigns decreased in August. Unfortunately, the number of new phishing sites reached an all-time high of 5,259 (up from 4,564 in July).

So, we’re seeing some progress in the area of phishing scams.

New Credit Card Pitches: Be Wary

Several credit card companies are now offering credit cards with a new twist: no $39 late fees if you make late payments.

This may sound interesting — after all, who wants to waste money on late fees? However, the catch is that late payments can trigger an increase in your interest rate. For example, American Express’ Clear card will currently increase the interest rate to 28.74% if the cardholder makes two late payments in a year.

Further, late payments may well still lead to a negative credit report, and these reports often cause other lenders to boost interest rates on other outstanding loans.

Action: Pay your credit cards on time (or early). If you must make a late payment, call to let your lender know in advance and explain the reason why.

Some Excellent Emergency Preparedness Tips From Subscribers

Subscribers have been sending us some great suggestions to add to our list geared to helping you with emergency preparedness in last week’s issue.

Here are a few of the best suggestions to add to your list:

– Toilet paper

– Food, water, and medication for pets

– A full tank of gasoline

– Regarding batteries: rechargeable batteries only stay charged a few months, whereas alkaline batteries can last much longer. Check expiration dates periodically.

Time to close. Now you can feel confident that you didn’t miss out on a great opportunity (besides saving your money) when you didn’t invest in the “hot” stock tips you receive via email. 😉 Have a great week!