A Weblog About Topics and Issues Discussed in the Book Spam Kings by Brian McWilliams

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October 3, 2005


A brief article in one of my local papers underscores the risks of stock tips that arrive via spam.

The article reports on an experiment by Joshua Cyr, a New Hampshire web developer. Cyr set up a site to track the value of 37 penny stocks touted in spams he received early this past summer.

Cyr's site apparently pulls live stock-price data from Yahoo, and computes the gain or loss on each stock, assuming someone had bought 1,000 shares.

While five of the stocks have shown gains, the rest have more or less tanked. So far, Cyr's hypothetical investment of $17,405.00 would have netted him a net loss of around $8,200.

While SpamStockTracker.com may serve as a valuable lesson to would-be spammed-stock investors, there's a conflicting message. Cyr has added a Google Adsense section to his site that funnels visitors into sites offering "1000% profit Penny Stocks" and "Stock Picks - Made 50% in 2 Weeks."

Posted by brian at October 3, 2005 11:45 AM


Good point about the conflicting message. Google doesn't let you dictate the ads to show so far as I can tell. Othewise I would put in the ads that pay off the most. Rather it seems, it determines them from the actual words in the site.

As of right now I have made $5.42 off the adwords. So perhaps there is a second lesson. Adwords is not a guaranteed winner either.

Posted by: Joshua at October 3, 2005 12:50 PM

Craig Hughes noted that shorting the stocks would have given a killer rate of return, though! -- http://www.hughes-family.org/wordpress/2005/10/04/shorting-spammed-stocks/

Posted by: Justin Mason at October 5, 2005 3:05 PM

I think shorting the stocks would be difficult though, as they are of such low value most brokers wouldn't allow it. The Financial Times just interviewed me and I think they were goign to look into it. If I get a definitive answer I will post it to the site.

On another note, nobody knew about my site until this blog entry. Today www.spamstocktracker.com is on boingboing.net and had over 18k visitors. Wow.

Posted by: Joshua at October 5, 2005 6:05 PM

A lot of brokers either make it hard or make it impossible to short these stocks simply because they are illiquid.

Let's say you buy a stock at $1 and it goes down to 50 cents, you lose half your money. But if you short it and it goes up - if someone sees you selling and triggers a short squeeze - you could lose more than $1 a share if the stock surges to $3 or more. With stocks that trade a few hundred or a few thousand shares a day, it's more than a small chance this could happen.

Short answer, yes you can win big by shorting these stocks, but you can also lose even bigger.

Posted by: Peter Warne at October 5, 2005 7:55 PM


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