Thursday, July 12, 2007

Stock Tips That Do Not Add Up

Beware of the Stock Tipster who Proves to be 100% Correct

It works something like this: "Stock Broker," Ira Foghorn, a complete stranger to you, phones and tells you to watch Blowhard Networks on NASDAQ. Its stock is going to go up. You do. It does. A few weeks later he calls again and tells you to watch Simpleton Industries. Its stock is going to tank. Again you watch. It drops, just as he'd said it would. Another few weeks later, guess what? He calls a third time to tell you that Consolidated Bread's shares will rise. Very curious now, you repeat your observance. And, of course, once more, this mystic is proven to be correct.

How did he do it?

Simple! You were one of eighty people, whose names he'd gathered from the internet, phone book, a directory, or other list. His second call was to the remaining forty, those to whom he'd proved himself correct. By the time he calls the third time, his list is down to twenty. You were one of the remaining twenty.

The word "con," as in con man, is derived from the word, confidence. And, I think you will agree that, based upon abbreviated face-time performance only, "Stock Broker," Ira Foghorn, has "performed," thus generating confidence.

In today's unreal, alternative universe, smoke and mirrors magic proliferate. In this setting it is most tempting to accept the infamous "free lunch," Now, Ira's suggestion that for a small up-front fee he will put you into Suckers, International, so that you, too, can share in the benefits of his omnipotence, sounds enticing indeed.(After all, lunch is always free, isn't it.)

If you bite, any further conversations with this flim-flam man will only get you a reaction akin to the fast-talking physician writing out a prescription while checking his watch as he mentally consigns you to his scrap heap of victims. To him, the surgery on your wallet is over. Successfully. Now it's time to brush you off, and get on to the next "mark."


jackpayne said...

This piece was picked up by quite a few stock brokerage houses on the net.

Am surprised so few know about this, a basic stock stam.

--Jack Payne

ace_assistant said...

This is interesting. I never had a broker call me, but I did have one show me what was supposed to be his wife's earnings statement from an aggressive fund that I ultimately lost a lot of money on. I can't say I didn't know it was a high risk, but I was comforted by the apparent high earnings of the statement I saw.

W. Rashow said...

I had to dig through the archives to find this one. Glad I did. It's a winner.

Terry said...

This is the second best post in the archives.