“What tangled webs we mortals weave when first we practice to deceive” – Shakespeare
“There’s a sucker born every minute” – P.T. Barnum
I know its been only a few days since my March article ran on these cyber-pages, but there is an issue currently unfolding in the market that simply may not wait until the middle of next month to be disclosed and discussed. I’m talking about a situation that is, in my opinion, a classic “Pump and Dump” scheme being run by one of the best “Pumpers” I’ve ever encountered and a very small and new company that wants to see its stock price soar.
I’m going to tell you all about it in a few minutes in hopes that you haven’t already gotten caught up in this subterfuge, placed money at high risk, and stand to possibly lose most if not all of it in one brief moment. And that moment, if it comes, could be at any time now.
Before I get into that I need to set the stage and tell you how and why I am aware of this. As much as I hate to admit to it, that knowledge comes from a recent personal experience that I ought have known better than to get involved in. But those twin terrors, Fear and her sister Greed, overcame logic and common sense. And it cost me. Not so much as to change my life – I never, ever put more money into any position that would cause me unrepairable harm if it were all lost. I knew what I was into shortly after taking a position and yet chose to ride it. I was making money, and very fast. Greed took over the helm of that little ship and drove it straight into the rocks.
And also remember this: I have previously disclosed that I maintain a little “Vegas” account in which I trade micro-cap and penny stocks for quick in and outs, hopefully to make a profit of whatever size. This isn’t investing – it’s gambling and I know it. The payoff to me is twofold. It allows me to satisfy that inner drive of mine to take big risks in hope of big reward. And the money I make – if and when I make it – is used to acquire the “toys” I want like a new laptop or sound bar for my HDTV or whatever. You get the idea. This lets me enjoy the fruits of my labors in the here and now. Assuming there is any fruit to be had, of course. I DO NOT recommend anyone do this because the risk is quite high and you will lose as often as you prosper. Hence the nickname of the account: The Vegas Account.
I think that’s all the disclosure and warnings I need to make. Let’s get the show started
The two players in this were a website called “Analysts Corner”, the “Pumper” for the company, and the company is Nutranomics, symbol NNRX. Remember the name of the Pumper here – Analysts Corner – we’ll see it again in a minute.
Here’s a somewhat condensed version of the events that unfolded.
On or about the 5th of November, 2013, I found an e-mail in my inbox from a company called “Analysts Corner” (hereinafter referred to as “A/C”). It was a short, 2 page summary of a company by the name of Nutranomics (NNRX) and had the appearance of being some sort of research report. This issue, coded as “Q4 2013, Issue #5.08”, was entitled “Health Without Pills.” It was obviously an announcement that the publisher felt was of real significance for NNRX, one likely to “put NNRX in the spotlight.” It went on to describe how NNRX had secured exclusive North American sales and distribution rights to the Nutriband delivery system, a health supplement transdermal patch. This system, when loaded with whatever health supplements you wanted, would eliminate the need to take those huge supplement pills we all know and hate.
NNRX “is designing these transdermal patches to improve sleep, manage pain, boost energy, and control weight. It’s health without pills direct to the bloodstream.”
OK – it goes on and on about the potential this holds for NRX and investors who see the significance of this development and want to cash in on it before the mainstream finds out. Typical hype and hope stuff. The stock price had closed the day before at $0.682 and was challenging the resistance levels of $0.65 – $0.70 Expectations were that the price would break out of this resistance the next morning and from there, well, nothing could stop it to $1.00.
They closed the letter by saying…
“NNRX could soon reach new all time highs (above $1.48). Remember, this is our expertise. We identify these early situations on the verge of massive success and provide triple-digit gains for our subscribers again and again. NNRX looks to be no exception. If momentum continues this pace, NNRX will soon join the ranks of our most successful picks to date.”
There was more, some with even bigger expectations and claims. I was intrigued, so I took a cursory look at the company for myself and found that, yes, the price had been on a tear to the upside as of late. There was little to no info on the company itself, its management or history. But it fit the mold of a company that I like to dabble with in that Vegas account. And having just closed out another position which left me with some uninvested cash, I was primed and ready for action.
If only I had read just a little further into that report …
At the very bottom of it, in pale print, was a little section that said “Please read our disclaimer and disclosure.” I didn’t do that. I mean, c’mon – aren’t all those disclaimers and disclosures just pretty much the same ole same ol’ boilerplate written by lawyers to get the publication and its people off the hook of liability for anything they say or do? Why waste time reading just another of the same? So I took a pass on it.
Big mistake.
The following AM I watched at the open for that predicted breakout above resistance – it didn’t happen, but so what? The price struggled and I took the leap and put on a starting position at $0.6025. The gambler instinct in me that rides on my right shoulder and whispers to me “go ahead, take the chance!” had carried the day over the common sense guy that sits on the other shoulder and whispers “don’t do it, man .. don’t do it!” The game was on.
As I held this position and watched the price action, the good people at A/C kept up the barrage of mailings with such reassuring and promising reports. On or about November 20 I got another mailing from A/C, edition Q4 2013 Issue #5.19. In it they fanned the flames rather extensively. After identifying what they think are the three key factors in a stock price moving higher (price uptrend, catalyst to movement, and potential price target) they said the following:
“Today was a textbook higher low day and as you can see from the chart below, this action was healthy, helping to move the price back into the uptrend clearly pointing toward $1.75 by January 27, 2014.”
OK, sez I to myself, we’re now at $0.70 and they are projecting $1.75 in two months. Nice if you can get it. What else is going on that could make this reality?
"reveal" emails? If not,
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I then read under the “catalyst” paragraph that…
“This is one factor NNRX has in abundance with the multiple developments on the horizon; including the GenEpic acquisition currently underway, Glucozyme product launch early December and upcoming human clinical trial results due within the next few weeks. Fulfillment of these developments will be major catalysts for NNRX’s stock price, helping push it toward $1.75 and beyond.”
Made some sense to me. All those catalysts working together in such short order is indeed one thing that often pushes prices higher, sharply and fast. If they all happen, that is.
Finally, under the “Potential” category they stated…
“The recently issued research report with a $3.75 target price translates into over 360% upside from todays close.”
I had seen enough. This NNRX, whoever or whatever it might be, seemed to have everything I look for to get into my Vegas account. The way the reports were worded made it seem that this “Analysts Corner” firm was a research firm of one sort or another. And the potential returns they were projecting, well, Sister Greed was licking her chops at the idea and Sister Fear was urging her on with ideas of missing out on this opportunity. I was hooked.
On November 22 I had a small profit and, for reasons I have forgotten, decided to cash out half the position. I sold at $0.7812 p/s, netting a gain of 27.5% in ~10 days. Not too shabby and I still had half the position in case of further gain.
That was when I noticed those disclosure and disclaimer once again and, having some idle time at that moment, decided to have a peek. Fortunately I wasn’t eating when I started reading or I might well have choked to death. First I looked at the disclaimer part. To give some credit where it is due, A/C has one of the easiest to read, most understandable and complete disclaimers I’ve ever seen. They disclaim EVERYTHING it is humanly possible to disclaim as far as accuracy, responsibility, and bias is concerned. Basically they tell you that they are not a research firm, are PAID by third parties to write and send these reports out, make no assurance that any statements they make are true, and generally protect themselves from any and all possible complaints by investors that act based on what they read from them. But one must pretty well expect this sort of thing in these cases. People love to sue other people when things go wrong, so protecting oneself fro that possibility is job one.Nature of the beast, so to speak.
But it wasn’t the disclaimer that was of primary concern. It was the disclosure.
In the disclosure they listed about a dozen payments they had received over the past few months from an entity called “Nugget Enterprises LLC.” Who and what they are and what interest they have in NNRX was not discussed. But those payments? These payments averaged about $100,000 per payments with a total of ~$1.2 MILLION dollars as of the time I was checking. I could find no records of Nugget Enterprises LLC, nor make any connection between them and NNRX. All I cold believe with certainty was that whoever / whatever they were, they had a huge interest in seeing the price of NNRX rise. That bit of info sealed the deal in my mind that, yes, this was a true “pump and dump” deal with Analysts Corner being the pump side and the dump would probably come from Nugget Enterprises when they were ready. That’s just my opinion, of course. I could find no connection to make that theory fact.
Even so, I had made money and the remaining position continued to climb. On December 3rd I doubled down at $1.03. A/C kept sending update reports and by now had a price target of $4.85 within 12 months. That was all well and good until I noticed in one of the reports, Q4 2013, Issue #5.26, they had dropped into the copy a new little paragraph. It was entitled “Pay Yourself First – as the trend unfolds, lock in profits” This was new. Nothing before had ever hinted at cashing out any part of a position – just buy more was the main message. While the message of this new inclusion was indeed a time-proven and smart thing to do, it was a little disconcerting to me. Why suggest any sales if the future looks so very bright? Things that make you go “Hmmmmm…”
Things continued to go well over the next few days, price rising in small fits and starts to ~$1.25. At that point I had an average cost basis of $0.82, a gain of 52.4% in a month. I decided that, with all I had learned about NNRX, Analysts Corner, and the addition to the mix of this “Nugget Enterprises LLC” I would be well advised not to look this gift horse in the mouth any longer. On or abut December 7th I decided I would sell everything when the price crossed $1.30 bid. It was at $1.27 at the time and I figured squeezing that last $0.03 out of it was absolutely possible so why not wait and get the last of it?
Ah, Sister Greed – you can be so alluring and persuasive.
And then the shoe dropped.
On the morning of December 9th I watched the stock open at $1.25, then bump up to ~$1.28. Just $0.02 away from my goal of $1.30 that would see me entering the sell order. I’d have a profit of some 56% or so and be one very happy camper. Figuring I’d give it a little time to hit that mark, I turned away from the computer screens and made a couple phone calls. When I went back into the office around 10:30 AM and refreshed the screens I felt like I had just been hammered by a NFL linebacker from the blind side. At about 10:10 AM, an order to sell some 1.5 million shares had been dropped and the price absolutely, totally, completely cratered. The current bid was at $0.58, down from the $1.27 I had just been looking at. The “dump” was on! And I was still long, trying for that last $0.02. Sister Greed was laughing at me, and Sister Fear had now turned from an attitude of missing out on a big gain to one of being in a situation where all could be lost. I had gone from a gain of ~56% to a loss of ~30% in one quick moment. That will take your breath away.
But hope springs eternal, and when hope is all you have to go on, you may do some silly things. I watched as the price stabilized a bit and a small recovery began. The bounce that refreshes was underway! I hoped. Realizing that this was either a prelude to total disaster or an opportunity to average down in what could still be a profitable deal, I chose the latter path. I bought half-again of the holdings I had at $0.6595. That brought my cost basis down to ~$0.76 or so. A recovery to that level was possible, or so I told myself.
But it was not to be. Even though Analysts Corner put out another update trying to put a happy face on these events – with no explanation as to why it happened. The rout was on and I was right smack dab in the middle of it. On December 12th, with the price slowly sliding down, I closed out the position at $0.4065. Soup to nuts, I lost about 40% overall. Such is the life of a gambler.
As for how has this played out since, well, I never heard another word from Analysts Corner about NNRX. An article published on Seeking Alpha trashed the resume claims of the CEO of NNRX. And yesterday (March 25, 2014), NNRX closed at $0.11. At least my last decision proved to be a good one. And I moved on.
So there is part one of this story, the story of how a real pump and dump scheme works and the dangers of getting involved. For those of you who are newer to the investment arena and might be lured by things of this sort, all I can say is BEWARE and be ready to lose everything you put in. Be SURE you can sustain the loss if and when it hits. And when it hits it will come like a tornado with you totally unprepared and unaware.
Now on to Part Two…
THIS IS THE CRUX OF THIS POSTING – A WARNING FOR ALL READERS
You now know the complete, detailed story of my little venture with NNRX, Analysts Corner, and other third parties whom I know little to nothing about. That was the cautionary tale that needed to be told so you can see that I am not just making this up and drawing conclusion with no basis in fact or experience. I’d remind you that I entered the NNRX position with eyes wide open, knowing what I was getting involved in (well, mostly at least), and take responsibility for those actions. This was done with money I could afford to lose if necessary. I was not acting out of ignorance or stupidity or any other sort of flawed reasoning. I would NEVER suggest anyone try to follow suit and get into this sort of situation. I believe in personal responsibility for ones own decisions and take full responsibility for what happened with my position in NNRX.
With that behind us, I want to make you aware of another similar event that is currently unfolding and give you the info you may need to avoid it. It starts with that “Research” firm, Analysts Corner.
After the dust settled on the NNRX debacle, and seeing that all communication from A/C had stopped re NNRX, I hit the unsubscribe button on their home page. I figured that was the last I’d hear from them. But not so fast, Buster. Apparently they don’t let go that easily.
Before I elaborate, for those of you who may be tired of reading, I’ll jump right to the conclusions in summary form. Those conclusions are:
- Be aware that any communications / recommendation coming from Analysts Corner, or any other affiliated source, is NOT to be seen as RESEARCH. They are paid to send out these messages by either the company under consideration or some other third party, motive unknown.
- The information presented by Analysts Corner is very carefully polished, given the proper spin, and designed to make the immediate future of the price moves appear near certain – regardless of their disclaimer telling us that they really have no idea of or responsibility for what will unfold.
- Any information and/or projections made in the reports from Analysts Corner need to be seen not as true, unbiased research but instead as conclusions they make which will give investors the idea that the company is poised on the brink of a major price breakout.
- The current company they are promoting, Rightscorp, Inc., is a very new company that came into being by way of a reverse merger with another company that had been listed on the OTCBB called Rightscorp of Delaware. This reverse merger enabled the new company to have a publicly traded platform from which to began to sell shares with little to no history of operations, revenues, or any meaningful track record. Prior to this merger, RIHT was operating as an entirely different kind of entity in an entirely different field, and with little success.
- With those factors in in mind, and with the recent events surrounding NNRX as detailed in the first section of this message, an investor who gets involved here is – in my opinion – taking on a huge risk of capital if this situation unfolds as did the one with NNRX.
- FINAL CONCLUSION: Stay away from RIHT and any other promoted stock by Analysts Corner. If ever there was a huge “BUYER BEWARE” situation, this could be it.
NOTE: These conclusions are those of myself alone and are just that – opinion based on recent events and the facts that can be uncovered. This IS NOT a claim that Analysts Corner or any affiliate is breaking any securities laws or is intentionally and with malice trying to defraud investors. They fully disclose what they are, what they do, and the fact that they are being paid to do it. Each individual investor needs to do some due diligence of their own and arrive at their own conclusions as to what game is afoot here. Then proceed according to those conclusions.
Now lets put some meat on these bones for those interested in knowing more.
Last Thursday, March 25, I saw an e-mail from Analysts Corner in my spam inbox. Curious to see if they were back on the NNRX trail, I opened it. And I found that, no, NNRX was not mentioned. Instead they had a new company, Rightscorp, Inc. (RIHT) to talk about. The report format was the same as I found with NNRX. Similar paragraph headings, similar projections and claims for this to be the next big winner. In other words, same S***, different day. But I just had to look. No harm in looking, is there?
The FIRST thing I looked at this time were those two items I had passed over with NNRX – the disclaimers and disclosures sections. The disclaimers were essentially the same – straightforward, clear, and totally scary in some parts when you realize what they are telling you is that they have no responsibility at all in making sure the things they say are true or accurate, they are being paid to say all of it, and that you cannot rely on one single word in making a decision to invest or not. Very slick. Very clever. Ironclad.
But the disclosure section, while the same idea, had different information. It showed that Analysts Corner was being paid by a company called Priority Partners, Ltd. this time. And again, no info on who that is or why they are willing to pay this stipend to them. On March 10, 2014, Priority Partners paid Analysts Corner $500,000 for the work to date. A cool half-mil in one payment! Something seems rotten in Denmark. Again.
So I took a closer look at this new company being promoted, Rightscorp, Inc (RIHT – OTCBB). Here’s what I was able to ferret out.
As mentioned above, RIHT in its present form came into being just a few months back when a reverse merger of the company in its then-configuration was completed with Rightscorp of Delaware. This made them a publicly traded company right away without need of all the filings and such that normally accompany a new listing on any exchange.
The business that RIHT is into is something that is directly tied to the entertainment industry, specifically the area of copyright infringement. The company has already developed relationships with a few major players in this business such as Warner Brothers. What RIHT does is send out leters to people who download copyrighted material telling them that they have violated the law, are subject to some serious penalties if taken to court and found guilty, but can atone for this misdeed by simply acknowledging the indescretion and paying Rightscorp $20.00 to settle the matter. That $20 may seem insignifignt, but there are thousands of instances every day where this occurs, usually done by some unwitting teen just trying to download a new hit tune or watch a movie. Getting that official notification from RIHT will certainly scare the bejesus out of most teens. It would me as well. So, in most cases, the money is paid and life goes on – with strict admonition from parents to the son or daughter that did this to stop immediately.
This approach to stopping this problem – which is pandemic within the industry – has taken root and is now being widely used. It would seem that RIHT is sitting perfectly positioned to take that ball and run with it. And truly, maybe they are. Maybe.
The insiders, executives, and major investors at RIHT are some very familiar names to people in the entertainment business. Analysts Corner makes much ado showing these names and giving briefs on them. For example, we have as CEO Mr. Christopher Sabec, CEO of the Jerry Garcia estate and someone who helped launch the Dave Matthews Band among other relationships. Mr. Sabec is beneficial owner of 10,875,000 shares of RIHT as of 10/25/2013. Sitting alongside Mr. Sabec is Mr. Robert Steele who also is beneficial owner of the exact same 10,875,000 shares as of 10/25/2013. What experience/connection to the entertainment industry Mr. Steele has I don’t know. These share amounts are in excess of 10% of the float of RIHT
As advisors we have (1) Bill Zysblat – he reportedly has already invested some $200K and is the business manager for David Bowie, Sting, Rolling Stones, and U2. (2) We have Mr. Jim Caparro, former chairman and CEO of The Island Def Jam Music Group, former chairman of Warner Elektra Atlantic. Investment, if any, undisclosed. And (3) Mr. Peter Paterno, Attorney for Metallica, Dr. Dre. Investment, if any, unknown.
These bio factoids are from the Analysts Corner postings. I have not verified the truth of any of the claimed associations or positions.
At a glance you’d have to admit this is a quite impressive lineup of industry professionals which ought know what they are doing. And perhaps they do. And as for the business model, this too appears to be legitimate and gaining popularity for entertainment companies to use to try and get the infringement issues under control. And RIHT is right there with the connections and insight to become one of the biggest beneficiaries of this trend. Or so it would seem.
Looks like I just made a solid case for immediate investment here. So what’s wrong?
First, it’s the big push that is underway at Analysts Corner than concerns me. It seems to match up near-perfectly with what happened at NNRX. As is often quoted, “Fool me once, shame on you. Fool me twice, shame on me.” And that $500,000 paid to A/C by Priority Partners? Who / what is that? Who is behind it? What positions might they have in RIHT? What is their intent? Inquiring minds want to know this stuff but no answers to be found by this Blind Squirrel. I remain blind in that instance. And it makes me very nervous. Even Analysts Corner, in the disclaimers, says they don’t know who exactly it is that pays them or what they are trying to ultimately accomplish. If they don’t know, how are we supposed to?
So there are a couple concerns about RIHT and it’s future. But there is another, larger one that isn’t discussed anywhere in the Analysts Corner bulletins. The issue is the entire concept behind these “demand settlement letter” that RIHT is using to collect money from accused downloaders. There is much more to that than meets the eye.
On Friday the 21st I got another spam mail from a different source but with similar look and feel of Analysts Corner stuff. The format and wording was similar, reminded me of the way A/C operates. I remembered that, in the disclaimers, A/C had mentioned that there may be some “affiliated parties” that also may promote the same stocks. Whether or not it is affiliated I don’t know, but I suspect it is. Anyway, they were also touting RIHT and made mention of a web site they suggested I have a look at since it related to this new “demand letter” process. The implication was that I’d find confirmation of future positive results for companies involved in the business. Curious, I went there to have a look. What I found there was a posting from a law firm by the name of “Cashman Law Firm, PLLC”. It is entitled “TorrentLawyer – Exposing Copyright Trolls and Their Lawsuits.” The actual author is unnamed.
What I read was, to me, anything but encouraging. For example, he/she states ” I’ve been fighting with myself trying to determine whether to write this article for a problem with Warner Brothers’ $20 settlement letters that they are sending out to accused downloaders of their content. Yet I suspect that this is just the beginning of something larger – I fear that the MPAA might be jumping on board the “DCMA settlement letter” scheme or even worse, starting to sue defendants again en masse for copyright infringement.”
That doesn’t have the ring of a positive statement to me. They go on to express concern that while acknowledgement of this demand letter and paying the $20 fee releases the accused from liability for that one instance, it actually is a legal form of admission of guilt to any future infringements and opens the accused up for fines of some $20,000 and attorney fees. So while that kid or parents thereof think they are getting off light, if it happens again, whether by intent or accident, they will be in a whole other world of hurt. Not good – not good at all.
You can read the full post by going to https://torrentlawyer.wordpress.com/tag/rightscorp. It’s worth reading.
I think I’ve given you all enough to go on for now. Beware any mail from Analysts Corner (find them at www.analysts-corner.com ) and any stock they are promoting. Specifically, at this time, Rightscorp, Inc (RIHT).
Might RIHT be a big winner? I don’t know. Is this a pump and dump? It has all the earmarks but then again, I can’t be sure – and I’m not accusing Analysts Corner of this. These is no proof of any such thing. You read, you decide.
Wishing you all the best of investment success and excellence!
URGENT P/S: ALL READERS TAKE NOTE
I always hate being wrong. And sometimes I hate being right even more. Here we have a case of the latter of those two.
I had just sent Travis the final copy of the story about RIHT when a price alert trigger for RIHT hit my screen. The selloff – or perhaps the “dump” has begun.
While I was concluding the article, RIHT opened at $0.85, went up a penny, then the selloff started. By 11:00AM the price had declined to $0.64, down ~ 24% or so. Volume was already near double a normal full day coming in at just over 500,000 shares – and there is still lots of day left. Curious, though, is that this is entirely different from what NNRX did. The largest trade I can find is for 37,500 shares. The rest are mostly in the 2000 – 6000 range. So it’s not some massive dump as was seen with NNRX.
Perhaps the reason is the just-released 8-K filing by RIHT that gives fiscal year 2013 results. The tone of the report is positive, but the numbers may have failed to live up to expectation. Since there are no analysts to give guidance I don’t have any idea what expectations may have been. But whatever the reason, be glad you are not in this. If I get any follow up reports from Analysts Corner trying to put a positive spin on things I will report to you.
Take this for what I first described it to be: A Tale of Caution. And a lesson to learn about the pitfalls that lurk out there just waiting to take in your dollars and give back pennies. Benjamin Franklin famously said “A penny saved is a penny earned.” That being true – and it is – I think of this as me having made 25% or so today by NOT being there. I hope the same is true for you.
Any pumper in the business (and there are plenty) is paid for copy writing. Good copy raises hope and frees people from common sense. What is so good about common sense? Sounds boring and cheap. I want unusually fast money to brighten the long, sad journey of my dismal life.
I think most of these copy writers must have learned their ‘craft’ from people like ‘Michael Masterson’ (more recently known as ‘Mark Ford’. Even the names are invented.) The careful use of paragraph size, key words, calls to action, repetition of the message, timing of repeated mailings, are all tricks to make the hopeful among us roll over and spill our cash in gratitude. The hook is set and we think “He knows me, he has touched my heart, my secret longing to be rich and free of the common! He likes me!”
I imagine that each of these operations is run by just a few people and it requires roping in no more than a thousand suckers at a grand apiece to make a cool million. A million in revenue at the cost of buying the mailing list of suckers, sending out the copy, funding the set up of the ‘corporation’ and priming the pump with some well placed market making purchases when the stock is cheap.
Jim…. thanks for sharing. After reading the first part about the disclaimer saying that they couldn’t be depended upon to “tell the truth” about anything, I had to laugh out loud when I read the bio of the 1st Advisor… As advisors we have (1) Bill Zysblat – he reportedly has already invested some $200K and is the business manager for David Bowie, Sting, Rolling Stones, and U2.
I seriously doubted the statement about Bill Zysblat until I Googled him and found this:
http://www.wired.com/wired/archive/6.10/newmedia.html
David Bowie is the real genius behind buying and protecting his own digital rights (and others) and made $55M on one deal alone. What I question is this? Who have they hired to make money at $20.00 an infraction?
These P&D scams are everywhere.
I can cite many that are being run by Jim Price, and his company Aero Financial, of San Diego CA.
One of his stocks is SYAI , formerly Systems America, now changed to Cloudeeva. That one was “Pumped” to $2.77, and is now .o4, up “57%” yesterday…so this is the start of another Pump whereby Mr. Price will make up “Research Reports”, and hire a phone bank of salesmen (watch out for Brian Kingsfield, another crooked smooth talker) to call up “accredited investors” who are on a list of prospective suckers. The Pitch is something like “we are working to get this stock on Nasdac, and you can get in now and sell when we are listed, for a huge profit.” Of Course, Mr. Price gets a huge block of stock, and is the market maker for the stock, and will pull the plug as soon as the stock is up to about $2.50…
Another of his stocks PEIW…based on total lies.
Another is Hole in one Organics, and most recently LGBI (Lion Gold Brazil)…stay away from this guy. I had posted my phone number in post one, it is now changed to:
415 895 0088, please call me if you need any info about Jim Price or his latest scams. Robert
Thank you so much, Mr. Squirrel.
I gotta ask, why are you writing about garbage penny stocks? And why oh why would you, knowing A/C is a scam, waste one minute more of your time looking into the next pump and dump they are running? Never ever ever ever buy a penny stock, and you can spare yourself from reading the hype from unknown hucksters about companies you can find nothing about.
Tom, thanks for responding. I can understand why you might ask this sort of question. I’d guess you have some – perhaps at lot – of experience in the investment world, maybe many years of it. And during that time you’ve gained insight as to what surrounds this “Pump and Dump” subculture.
But when you say “waste one more minute of my time looking into the next pump and dump” I’d have to say this: have another look at the 23 comments that preceded yours. Note the number that, in one way or another say “thanks” for the info I presented. Those answer your question.
See, here on the Gumshoe site – and everywhere, really – are thousands of readers that are not yet where you and I and many others are in this process of education about investing. This is new or relatively new concepts for them. My job as a financial journalist is not only to offer some insight that ay be helpful to the more well seasoned of us, but to the ones that are still on the road to understanding. In fact, it may well be that I serve a higher purpose by presenting ideas and concepts that is aimed more at them than at you and others like you. No one is born knowing all this. You learn either by direct experience – an often painful way to learn – or by reading about the concept from some source that has been there, done that, and is willing to take that time you mention to educate them so they don’t have to learn the hard way. My mission here as I see it is to offer ideas and advice that will help as broad an audience as possible. Especially the newer arrivals. You didn’t need to hear about Pump and Dumps. Many others did. And, as newcomers, they often are somewhat reluctant to jump into discussions like we have here for fear of looking foolish if they ask what might be seen as a “dumb” question. I know I’ve been in that same situation myself involving many different topics. And I always loved it when someone with greater knowledge than me stepped up and provided information I needed and wanted without me having to ask. You know that feeling? I bet you do.
I trust you can understand and respect that. To paraphrase yet another of P.T. Barnum’s famous quotes, I can please some of the people all of the time, and all of the people some of the time, but never all of the people all of the time.
I’d ask all of us who have experience and knowledge to be more understanding of that and offer helpful comments that newbies can learn from rather than phrasing a reply in a manner that would discourage legitimate inquiry. As a former educator (my first real job was as an instructor of economics for 12th grade high school students, 1970 – 1972) I can tell you for sure that what a teacher wants to do first and foremost is foster an attitude of open questioning by the students. If they feel comfortable and free to ask any and everything, the learning process is enhanced beyond belief. I try to do that here, never talking down to anyone, encouraging learning and questions.
I hope that answers your question.
Thanks Jim. A great article. I just started stock trading recently and for someone like me this article is very helpful. The scammers got my e-mail from somewhere. I get so many of these junk mails evryday there is no time to read. So most of these get deleted. I do enjoy Stock Gumshoe, especially the articles written by Travis. Keep up the good work.
Thank you Jim. “The best teachers are those who show you where to look, but don’t tell you what to see.”
Thanks, Jim for a great article and that’s one of the best responses to a derogatory attack I’ve seen. My hat’s off to you sir!
I received a 20-page bulletin from John Person’s “Bottomline Newsletter” around March 18, suggesting that far-sighted investor’s could double(or triple) their money by investing in AHII. In their disclaimer, which even in small print took up a third of page 16, it said Rui Long International Inc. has paid or expects to pay upwards of $1,643,756 as total budget for this advertising effort. National Futures received a $25,000 editorial fee to prepare this report. The report ends with subscription info for John Person’s BottomLine Newsletter at $899/year, ($359/yr before May 30).
John Person now has the dubious distinction of having his “brilliant pick” go down 50% in 2 days. I wonder what labels the investors who lost money by believing his hype would apply to him now?
Started playing the market about 6 months ago. Started out buying ebay, then found this newsletter. Followed Myron and have done pretty good. However, where I have done extremely well is the OTC stocks in the MJ market. I could not tell you if they are shells or not. I play TRTC continuously for a nice profit. In my opinion, the RvR is lower at the OTC level. $500 invested may turn into 50 -500% rather quickly and most times the loss is around 50%. You do have to constantly track those stocks though. Just my experience. Use mostly TA on the OTC, because the fundamentals are absurd.
Keith, yours is the first mention of the Pot stock mania I’ve seen here. I wondered when somebody would get around to it.
That sector is indeed rife with potential scams, meaningless shell companies, hucksters / promoters, and other such critters. A couple or three companies are legit with enough background to do some DD on, but most are not. Buying into them is the purest form of gambling currently available in the marketplace. This is a situation where, if I were so inclined, would most certainly only consider for purchase in my “Vegas” account, the one I run for pure speculation – and expect to lose on quite often.
For you and any others that may be diving into this shark tank, it’s “Buyer Beware” to the max. This is not really investing- not yet, anyway. It’s Wall Streets current roulette wheel, blackjack table, craps game. A few fortunes are being made. Much more is being lost at the same time.
On a personal level, the new laws in Colorado and elsewhere have finally opened the floodgates of demand for MJ both as a recreational substance and for true medicinal purpose. This trend will not be reversed, and as time moves ahead and attitudes by both the general public and politicians evolve, some of these companies will prosper greatly, many will die on the vine and take a great deal of money down the tubes with them. Regardless, it is now a brave new world unfolding that will expand. And as is true of any totally new situation, the risks are huge and the profit potential – if you are very lucky – will offer equal possible reward. The only question is; what stocks, specifically, are going to be the winners? Tell you what – write me back about this in three years and I’ll tell you which one were the winners and which were the losers :0.
And, in true Forrest Gump fashion, “that’s all have to say about that.”
My portfolio has risen on MJNA stocks since the first week of January on big swings by such c
ompanies as PHOT, MCIG and RFMK. But after a couple of sharp downturns, reality sets in. As Keith D. suggest, you have to watch them closely because there is often no reason to their quick momentum changes.
I remember reading about the CEO of Bear Stearns. His company was one of the most
respected businesses on Wall Street. Sure, they were repackaging mortgages, dealing in the sub-prime loan markets, engaged in derivatives trading and advanced hedge fund strategies. But President Clinton himself signed the banking reform act, under the advisement and council of Senator Phil Gramm of Texas. Senator Gramm spearheaded the the Gramm-Leach-Biley Act which repealed significant portions of Glass-Steagall. This distinguished Republican Senator had a PHD in economics from Univ. of Georgia, and was a college professor for eleven years. If you can’t trust him, who can you trust? This dude even ran Senator McCain’s presidential campaign. McCain trusted him. Shouldn’t you?
Well, the poor CEO of Bear Stearns rode his portfolio down from over a billion dollars
to $20,000.00 and change. His 20 year career, his retirement money went up in smoke.
He believed in his company & the business strategy planned and directed by his staff which contained two Noble prize winning economists. What could go wrong? Could Alan Greenspan, Phil Gramm, the Ivy League kids at the Bear Stearns trading desk, and he
himself be wrong about his company’s rosy future?
The Blind Squirrel makes a great point about pump-and-dump newsletters, and dishonest businesses that want to legally rob us like the wolf of Wall street. But how
do we protect ourselves from our own self-delusion? When top insiders like CEOs of the leading banks, the chairman of the Fed, Senator Gramm, and Noble prize winning economists themselves get completely fooled by the chicanery of others and their own
self delusion, what hope is their for the average Joe investor? The idea of capitalism is predicated on pump-and-dump, from AOL, Worldcom and Enron from yesterday to Google, Amazon and Apple today. This is the American dream my friends. This is the substance of fire.
Thank you Blind Squirrel for your pump and dump story. I agree with your response above to a reader- this reader asked why you would even analyze such blatant tomfoolery. You responded that, to paraphrase, not everybody on this site is an experienced investor, and you were explaining the pump and dump scenario for many of the more novice readers (not your words exactly). Sometimes on this site, authors and readers alike talk above “our heads,” and it is refreshing to read a cogent, descriptive war story that is understandable to the typical Gumshoe subscriber. That is one of the main reasons I subscribe to Gumshoe- Gumshoe explains technical investing lingo in everyday language.
After reading the comments for the last 10 minutes, I was reminded of a post I left a couple of months ago…then ,I commented on the fact that Patrick Cox ,who ,I believe at the time of Travis’ mention had been either fired from AGORA FINANCIAL or had been otherwise told to find employment elsewhere SOON. Breakthrough Technology Alert and it’s sister some Technology …. whatever,…..some name I’m trying to forget ….The aforementioned newsletter costs nearly $900 ,on sale…what a bargooon. Figuring I’m paying for kinna ,bitta “inside info”…like a newbie that I was ….I went along with 4 recos . The moment I bought them, they fell in value, some more than 75%…some 50%….one actually went up ,but then …down. What ? one out of four ain’t bad…is it? ‘Specially when you’re paying these A holes nearly a grand for so called “information”. Far as I am concerned ,Travis is one of the few people that takes a balanced and a good cautionary approach towards what as I see now as minefield of unknowns and ,as we have seen from previous comments…total deceptions. Oh…And I have read the disclaimers.that they end with……mighta saved me more money…so thanks I had that foresight….trusting the high paid “experts” was the mistake.
I’m not dropping out, going to join the irregulars ,pay a little ….get a heck of a lot more from his thoughts (and humor) than the double-doodlie kick in the cahoonies I got from these other so-called financial gurus….
If I’m not mistaken, Patrick Cox may have been the one who gave the long-winded presentation on Stans Energy and their ability to profit in the Rare Earth market when they were at $2.00. They’re now at $0.05, so he deserves the Big Boot!
That was Byron King. Same publisher, different focus.
Bywrong led me down the path of financial destruction with HRTPY. He kept touting HRTPY as a buy, and I kept averaging all the way down…. I sold 1/2 my position for a huge loss and am still sitting on a stock that is down 80% and hasn’t gone anywhere since last October.
Bob:
Congrats on your decision to become an Irregular. You may have noticed that I began most posts with a suggestion that everyone do that. For the price – $49 a year – you get a real benefit in the time you can save by seeing Travis’ teases unraveled in a summary form plus some articles that re reserved for Irregulars only. Info you can use, not junk filler material that some other site use. You made a good decision there.
I can’t resist asking all others who may be reading this – are you Irregular? No, not in that sense . this isn’t the place for a gastrointestinal distress discussion. (or is it? We seem to be talking about people who are full of S*** much of the time :0<). If you're not Irregular in the Gumshoe manner, com'on, people .. get with the program and join up TODAY! Travis has mouths to feed and I think is secretly lusting after a Bentley like the one I don't have either. Note I said "DON'T have." But you (and I) might get one for yourself someday because you invested $49 in this site, became an Irregular, gained more insight into investing, made a great decision because of that, and BAM! found yourself with a quarter million or so that can be used for your new ride. What a deal! :0)
Why do you folks even consider “penny stocks” to begin with.
Bill .. gotta add this about “penny” stocks. Your implications is that none of them are worthwhile. Not true. Some, the real ones, can and do make a lot of money for investors. Look at what happened to the company I got a blog started on here on this site last August, Stellar Biotechnologies (SBOTF). Pull up a chart – then wish you had bought in about this time last year at ~$0.12. Or, like me, in July at ~$0.63. Or as the news kept coming and the price rose to over $2.00 by December. Today is ~$1.70 or so. A very real company with a very real product (KLH) in a very real business development phase.
That’s why those of us who have the ability to sustain the possible loss these kind of companies present consider, investigate, and sometimes buy in. It’s high risk, yes indeed. You MUST be very careful, exercise much caution. But not all are junk, and the returns can be powerful.
All must make the call for themselves as to whether or not to get involved. But to simply apply a blanket condemnation is inappropriate in my opinion.
“From little acrons grow big oak trees” – Unknown
Jim Skelton
The Blind Squirrel
DISCLAIMER: I have no position in Stellar Biotechnologies at the present time and will not engage in any trading activity in that issue for at least 72 hours from the time of this posting.
Remember the pop music analogy for new technology. Just like pop music, 90% of new technology ideas will not stand the test of time. It is difficult to pick that 1 in 10 that is going to be a winner when it and the other 9 are all just released. Just to push it a bit further, an unknown artist with a self written song is more likely to fail than a known artist with a self written song or a new artist doing a cover version of someone else’s hit.
So to the tech stock. If this is a new and tiny company with a revolutionary product, it is a near certain failure. I know you can all think of names that disprove this, but there were thousands of failures, now forgotten, for every success. You may have a bit more confidence in an established company with a new line new line – or a startup company joining a known field in which existing operators are making a profit.
You can always put a stock that tempts you on the wish list and wait for confirmation its revenue is increasing. If it is the 1 in 10 winner you will not have missed the boat.
It isn’t the fault of the p&d. Squirrel could have made a bundle quickly if he settled for a lower return. Real squirrels will settle for even a half of a nut if they can make a clean get away.
Yep – you are right, Vincent. Sister Greed took me for that ride, but it’s all on me. Some people say I’m half a nut anyway, and in this case I wish I had been! :0)
Jim Skelton
The Blind Squirrel
If we knew correct timing in the stock market, we’d all be multimillionaires!
Well I too had to learn the hard way with penny stocks, but at least I only invested about $500 (sort of like vegas money). I bought 25,000 shares of mPhase (XDSL) on some great sounding info about their membrane technology (for batteries and other stuff). They were selling for under 2 cents at .0188 and well now are at .0013. I still hold that because the $50 it is not worth is not worth selling and I still think they might come back. They are still trading and still seem to have something to sell. And you can get in dirt cheep now……. LOL. But even learning that lesson we can still get caught up in hype over stocks that are not penny and seem very promising like GasFrac (GSFVF) that yes I bought at $13.15 – hardly a penny stock, which is now at $1.46….. And lord knows what a bargain it is now – run don’t walk to buy your shares. At least I did not double up on the way down. But again I still hold these hoping for the resurrection – my thousand bucks, – which is my normal position in any stock to start – is only worth just over $100 now so I will hold forever or at least until the rest of you buy this fabulously undervalued stock and drive the price back up. Ok I won’t hold my breath.
Great stories sure can make lousy stocks sometimes! That sparked my memory, XDSL was teased for their “forever battery” back in 2008, at the time it was up closer to 13 cents. Never let it be said that a cheap stock makes a better bet because “it doesn’t have as far to fall” (I know you didn’t say that John, it’s just a justification I hear often about junky little gambles), every stock has exactly the same possible loss (100%)… and the closer a stock is to zero, the more that $0.000000 price seems to act like a magnet for the shares.
Thank you for writing this. I’m new to the stock market, and like you, I have a little set aside for what I call “fun money.” I have a hard time waiting for the long, slow results, so this gives me a little excitement while patiently waiting for the others. I’m currently mixed in with the PLUG debacle. Got in too high, got out with a $128 profit … and so tempted to jump back in. But I know my luck will run out. Thanks for the eye-opener.
Carmen, I know nothing bout you, but let me assume you are still working and have a minimum of 20 years to retirement age of 65 to 70. If that is in the ballpark of your situation the best advice I can give you follows. Pay attention.
Be willing to take that “long, slow ride” you refer to. Embrace it. Fast money is fun but seldom lasts long. Slow money is boring but endures. Accumulate shares in large cap value stocks that pay dividends and tend to increase those annually (or nearly so). Set these up on what is called a “D.R.I.P. plan (stands for “Dividend Reinvestment Program”, talk with your broker-dealer firm where you have your accounts set up for info) so that you automatically purchase additional full shares and/or fractional shares of that company every quarter (or month) when that dividend is paid without sales charges of any size. Watch the companies for trouble of a MAJOR nature which may require a sale, but don’t trade these. If the trouble they are reporting seems to be of a temporary nature, just hang in and hold on. It will be a little painful as you go through this but the wounds generally heal. Ride out the storms of general market declines that are CERTAIN to come from time to time. If you can, find a strategy that has a record of producing good results – not necessarily FANTASTIC results, mind you, just good ones – and discipline yourself to let that work. The Dogs of the Dow approach might be just the ticket – I’ll be writing in detail on that strategy soon. And do that not for a month or a year, but for a couple decades.
Do that, and the odds are very much in favor of you retiring someday with a comfortable nest egg to supplement your other sources of income and really enjoy life. That’s the payoff – finally reaching a point where you are old enough to know who you are, what you want, and have the funds to get out and do those things you couldn’t ever do before. Or do the things that previously you wanted to do but were afraid you’d be embarrassed about if found out. I’ve found that after age 65 or so you don’t have to worry about that kind of stuff anymore – who is left to impress?
Thanks for your reply. Wishing for you only the best of Investment Excellence!
GasFrac was the first stock I ever followed (and would have bought if I had money for speculative investing at the time). I’m glad I never put any money there.
Thanks for your articles Jim I have enjoyed reading them. I believe that the wind under the wings of these “scams” is the evil sisters Greed and Fear. We as humans are creatures of emotions. It’s just that some let their emotions cloud their good judgement and I have been guilty of that some times in my investments. Don’t know who said it first but “experience is the best teacher”.
Hey Jim !
Thanks for sharing your experience.
I’m not nearly as smart as most of your other posters who never get taken in by a “hot tip” and they never get greedy, and they seem to know exactly when to buy and when to sell. I’ve been screwed by the P&D more than once. I’m definitely more careful about my picks than I was in the past (tech-bubble days) . . . but even recently, I’ve made some purchases that I’m second-guessing, that were recommendations from one of the very teasers (from a well known name) you’ve covered here. The P&D lives on !
A good place to do some DD on these types of stocks is over at http://www.pumpsanddumps.com. They’re on top of this stuff for a very reasonable price.
As the lead said:
“There’s a sucker born every minute” – P.T. Barnum
Analysts Corner was just taking W.C Fields advice to prove P.T. Barnum right” “Never give a sucker a break.”
Actually, to be fair – not sure why – Analysts Corner did disclose that they were being paid to send out the e-mail.
When you suspect it is a pump and dump, do the second part first unless you have a strong stomach and can cope with strangest, fastest, most stomach churning ride at the local amusement park, in which case keep your stop lose tight and don’t EVER expect it will reach any level you may have wet dreams about.
Disclosure is generally pretty good from the pump-and-dump crowd of stock promoters — it’s easy to include the disclosures, I’m sure almost no one reads the disclosures, and it must keep the SEC off their backs. I don’t know what the real limits of the law are in this area, but it is pretty remarkable the many ways in which marketers and promoters seem able to take advantage of people as long as they say, in the fine print (which no one reads), that they’re lying, stealing, dissembling, and making stuff up.
Travis is, as usual, dead on about why Analysts Corner discloses the payments they get and all the other things that seem incredible that they do. It’s not because they are such honest, straight-talking folks. It’s that they are REQUIRED by security law to make these disclosures, and also to prevent any of the “you never told us that!” kind of lawsuits that would be filed by the hundreds if they kept it private. They tell us what they must to stay out of the Arbitration system, period. And they count on many investors never getting all the way to the bottom of the tout sheets and finding the Disclaimer and Disclosure sections, then actually taking the time to read them. It works.
Thanks for the ‘pump and dump’ article.
I’ve never tried to work out the mathematics to see if this holds up but – because of the effect of leveraging – I believe it might be possible for the perpetrator of such a scheme to take a large short position on a scam like this and make an even a bigger killing when the dump finally transpires.
Any thoughts?
Very interesting article about the Pump and Dumps. They can be very alluring. Here is what I do to remind myself not to get sucked into these pitches. I keep the newsletters that I receive and then I track the results. Here are a few examples:
1. Quest Water Global – QWTR – pitched by MicroCap MarketPlace Summer 2012. In December 2012, it was at 45 cents per share. Between then and Jan 2014, it drifted down to a low of 1 cent and in Jan 2014, it was at 22 cents.
2. Focus Graphite – FCSMF – pitched by Agora (Outstanding Investments). In May 2013, it was at 66 cents. In Jan 2014, it was at 53 cents, going to a low of 24 cents in between those dates.
3. Star Scientific – originally CIGX and now STSI – pitched by Agora (OI). In Dec 2012, it was at $3.21. In Jan 2014, it was at 99 cents.
4. Stans Energy – HREEF – pitched by Agora (OI). Dec 2012 – 48 cents. Jan 2014 – 7 cents.
5. Brazil Minerals – BMIX – pitched by NBT. June 2013, 61 cents. Jan 2014, 7 cents.
6. Coyote Resources – COYR – pitched by The Natural Contrarian. May 2013, 85 cents. Jan 2014, 6 cents.
I could keep going, but you get the idea. Out of the 20 of these that I currently have on my desk, 18 of them are lower now than when I first received the pitch. In fact, the several that I cited above are not even the ugliest ones…………
Polar Petroleum, pitched by Hard Asset Report. Was at $5.32 in June 2013 and closed at 6 cents today (3-27-14).
There are only two pitches I have seen for penny stocks where the share prices are higher now than when I received the pitch — VEND and BRFH.
So, whenever I start feeling a little too greedy, I just start flipping through all of these pitches. It helps keep me grounded.
Thanks for sharing. I didn’t know Agora was involved in any dubious stock pitches….
Glenn, this happens quite often. And, so long as it is covered in the Disclosure part of the message, is totally legal. Immoral is another matter that is up to the investor to decide.
Many people think this kind of thing – a company shorting a stock, then sending out reports bashing the company in hopes of sending the stock price crashing down to turn a handsome profit for themselves is somehow illegal or ought be.. But think a moment – is it wrong any more so than a firm going long, then sending out reports of praise in hopes of seeing the price rise? That is the exact same thing in reverse.
Every day, major Wall Street firms send out research reports to clients and prospects that detail why an analyst thinks the stock price could and should rise. At the same time, the firm the analyst works for will have a long position in the stock and profit from this increase if it happens. Then there are those firms such as Muddy Waters who, as in the recent case of XXXX, took a HUGE short position and then issued a scathing (and as it turned out, mostly misleading) report that sent the price tumbling from ~$25.00 to ~$9.00 in quick order. Was it immoral for Muddy Waters to do this? I’d say no f the research was through and grounded in verified fact. But it would seem that this wasn’t altogether the case there. Some of the claims were true – many either weren’t or were vastly overstated. So in that instance I think it was wrong of them. They caused serious financial damage to many investors (myself included just for full disclosure here) and damaged the reputation of the company almost beyond repair. Plus costing them millions in damage control and man-hours trying to refute the claims.
The upshot of all this is that being short and then issuing reports of a negative nature, or being long and issuing those with positive spin are peas in the same pod but at either end. Both are legal. The difference comes when either is done with full knowledge that the information being sent out is false and misleading, and done so simply to push the position they have higher.
Which all just tells you in another way why investors have to approach any investment with a somewhat skeptical attitude at first, consider the source of the information and their reputation, do what due diligence they can in finding out if the claims are valid or not, and then deciding what to do about it.