True Confessions of a Copywriter

[Ed. Note: This piece is by a former copywriter for a major investment newsletter publisher. The author contacted us with an interest in pulling back the curtain to give our readers some insight into how these teasers are written and why. We hope it will help us all think carefully about those tantalizing, hyperbole-filled teaser ads when they land in our inbox. Enjoy!]

As a copywriter in the financial newsletter business, I would frequently visit Stock Gumshoe. It was helpful to see which promotions readers founding intriguing enough to request a Gumshoe debunk. And of course, I read the comments.

In the comments great insults – ‘snake oil salesman!’ – were hurled at our editors. Commenters were upset that the advertised ‘sure deal’ promising upwards of 1,300% gains didn’t deliver. Yeah, the editor’s pick didn’t turn out, but the editor’s only half the problem. I was the other half: the copywriter.

So, the first thing you should know is that editors rarely, if ever, write their own promos. Publishers have copy divisions and also hire freelancers. And nine times out of ten, the ridiculous claims come from the writers, not the editors.

So, why all the hyperbole?

Apparently that’s the only thing that works. I was told that in the past writers had tried more toned down promotions, promising more reasonable two-digit gains (10-99%) instead of trying to get you hooked on the hopes of nailing a ten-bagger. But these types of promos were shelved after being consistently outperformed by promos with ridiculous and unbelievable promises.

Copy should invoke greed or fear, I was told early on in my days as a copywriter. And the easiest way to elicit greed from our readers is to exaggerate the upside and hide the downside. But exaggeration isn’t the only problematic aspect of promos.

We craftily use words to obscure the truth

In some ways, all advertising is about deception, but it is especially rampant in the newsletter industry. One deceptive technique is the abuse of imprecise terms like ‘recently’ to create a false sense of urgency. For example, in a promo I’ll quote a four-year old Wall Street Journal article that supports my argument and call it ‘recent.’ Then I’ll go ahead and assert that because the mainstream media is ‘just now’ picking up on this phenomenon, that means it is about to skyrocket. So the time to buy is now! Don’t delay!

Other times we re-brand basic financial tools to create intrigue. I mean, you wouldn’t believe all the different ways thought up to disguise and dress-up dividends. We call them royalties or rebates, rent checks or secret government programs. Then, when we go to give profit examples, we look up and see how many shares company insiders have. Multiply those numbers by the dividend payout and you’ve got ‘real people’ receiving four or five figure checks every month with this ‘unique profit loophole.’

Also be aware when a promo touts an editor’s past picks by saying things like ‘my readers had access to’ or ‘had the opportunity to bank a gain of…’ Often this means the editor published a sell recommendation and the stock continued to climb. So the official portfolio will show a much smaller gain than what the promo is advertising.

When watching promos it is best to watch out for all these deceptive practices, however keep in mind…

It’s not a complete scam

Some editors work really hard for their readers, always seeking the best opportunities for them to grow their accounts. These guys really do put ‘boots on the ground’ and develop networks of industry contacts. Now, they’ll still exaggerate in promos, and sometimes their picks don’t come off, but they do care and they do work hard, and oftentimes their service really is worth it.

And while not all editors have the same level of integrity, as far as I know no one at our company was ever paid to pump a stock. Companies will work with us to get their story out there, but I’ve never heard of a bribe.

However, other times, it’s kind of a scam

This business is dominated by copy. It’s a business of ad men. They are selling you stories… selling you dreams, greed, and fear. It’s not the business of financial geniuses. The main focus of their business is on selling, not on delivering results. If it were otherwise, there would employ fewer copywriters and a lot more analysts.

To that end, sometimes the ‘big idea’ of the promo comes first, and whatever stock happens to fit the story will work, regardless of whether it is a good investment or not. In fact, I had one editor who asked what stocks I thought should be the subject of the promo’s tease. Keep in mind, I had no financial education or experience heading into this job.

And sometimes it really is just a straight-up scam

I heard this story a few times in the office, about a different financial newsletter publisher. One NFL postseason this publisher decided to ‘predict’ the result of each playoff game by sending half their readership one result and the other half the opposite result. Each time, of course, it halved the available readers, but they still had quite a few readers left by the time it was ready for the Super Bowl. To the readers that remained it looked like they had got every prediction spot on. And of course, while previous predictions were made free of charge, they billed readers for the Super Bowl prediction, this time an actual prediction.

And of course, there is also everyone’s favorite trick: sneaky auto-bills. Promos are long – and often quite boring – and auto-bill trickery is usually found at the very end or in fine print below.

Pump and dump schemes are also something to be wary of. I had a coworker tell me to front run the stocks I wrote about, but I never played the market. When I asked a writer who had been in the business for longer if he ever picked stocks based on the bevy of free editorial information we had access to he laughed and said that he learned early on to not get caught up in the hype. The owner of the company and others referred to it as ‘drinking the kool-aid.’

So how do you protect yourself? How do you separate the quality services from the fluff?

Readjust your expectations: there will be winners and losers.

If a promo promises 5,000% gains, most times you should be expecting 50%. If an editor brags about how many triple digit gains (100-999%) they’ve scored, make sure they are in the official portfolio, then pay attention to how many times their picks lost 50% or more. Services focusing on riskier stocks will often have larger winners but also bigger losers as well.

Make use of 100% money-back guarantees.

Watch out for shelving, stocking, or other fees, but a truly 100% money back guarantee is a great opportunity to evaluate a service. Take a look at the editor’s portfolio, look at how many trades they make a year. Don’t just look at the winners, take a hard look at the losers, too.

Don’t trust charts.

Charts are a copywriter’s best friend. Be skeptical of every stock chart you see. It’s easy to pull eye-watering gains out of stock charts. But no one lands these gains, and being off by just a few days can halve that impressive gain you’re seeing. Charts also allow writers to claim the possibility of four-digit gains (1000-9999%) while the editor’s best gain is in the low three digits.

Don’t fall for a false sense of urgency

Yes, sometimes there really is a limited number of overall spots for a service. But rarely do these spots completely fill up. And sometimes there actually is an upcoming catalyst that will kick a stock into high gear. But usually there isn’t any reason to panic or buy before you’re ready. Take your time, do your due diligence, and make sure you spend some time reviewing the service before you buy.

Use Stock Gumshoe

Sometimes the stocks with the best, most enticing stories end up being the duds, while a boring call doubles or even triples. Don’t just fall for the story, make sure the underlying stock is healthy, too. One of the best ways to cut through the hype is to use Stock Gumshoe. Find out what other readers think of an editor or a service. And best of all, use Stock Gumshoe to help decode all the copy bullshit writers put in there so you can evaluate an opportunity fairly and accurately.