Well, it’s been a long time since I’ve written about this particular investment newsletter from the Stansberry folks, so I thought I should take a look for all the new people we have on board here at Stock Gumshoe over the last six months … and to see if he’s changing up his strategy at all.
The new teaser is all about using special multi-digit teasers to implement the “Amsterdam secret” and pull in $1,667 or more per month … which they also call “Europe’s biggest retirement secret.”
And of course, the Europe/Amsterdam bit is not terribly relevant, but it does serve to draw you into the story and make this investment technique seem mysterious (and oh so terribly continental, don’t you know). The letter’s signed by Mike Palmer, who is the head honcho for the copywriters at Stansberry, and the pitch brings us in by talking about his years touring the globe for “William”, who must be Bill Bonner (founder of Agora, the granddaddy of modern financial newsletter marketing) … that globe-trotting led him through Amsterdam, where he said this special secret was born at Damrak 213.
Well, after listing dozens of names and examples, and telling us about several folks who grew wealthy using this secret, the ad starts to get into the details a bit more.
“… while most Americans simply buy stocks and wait for them to go up, this little-known investment vehicle that first originated in Amsterdam several hundred years ago, has created a way for investors to get paid today, upfront… in 24 hours or less.
“It’s not a dividend… an advance… or anything else you’ve likely heard of before.
“For those who know, it presents an extraordinary new way to potentially turn a small amount of cash into thousands of dollars… from an American brokerage account, thanks to an investment secret born overseas. ”
And the guy that’s one of the experts in this technique is called “Jeff” — they don’t give his last name, though he’s Jeff Clark, who also writes for their free Growth Stock Wire pretty frequently as a trading expert. And the newsletter they’d like you to pay for to learn more about the ways to profit from this “Amsterdam secret” is called Advanced Income.
Which, right away, will tell some of my longer-term readers exactly what it is they’re teasing today. And the rest of you might be clued in by this next bit:
“The 17 to 21 digit ticker symbol
“As I’m sure you know, most American stocks are identified by a ticker symbol, usually 1 to 3 letters long.
“For example, Wal-Mart’s ticker symbol is WMT.
“But this investment that first originated in Amsterdam (but is now prevalent in America) is identified by an unusual and much longer ticker, 17 to 21 digits long…
“And according to Jeff, that’s exactly what tens of thousands of ordinary Americans across the country are using to make a fortune…
$708 by tomorrow morning. Take Alcoa, for example… an aluminum company in Pittsburgh. There are 2 ways you could invest:
“You could simply buy the stock – by entering the American ticker AA into your brokerage account… and hope the stock goes up.
“OR… you can enter ticker AA100522C00010000 into your account – and receive $708 thanks to this company by 10 a.m. tomorrow morning, due to this remarkable secret birthed in Amsterdam.”
So that’s the basics — you enter this special ticker symbol and receive $708?
Well, sort of — what Jeff Clark does in Advanced Income is sell covered calls. And for those who haven’t been paying attention lately, the options industry has adopted the new user-friendly options tickers like that one above for Alcoa — the ticker (or sometimes designated root letter symbol for the ticker, in the case of some four-letter tickers), followed by the date (year, then month, then day — so 10 for 2010, and May 22 in the Alcoa case), then a letter for what kind of option it is (put option or call — this is a C for call), and the strike price (for some reason they leave three spots for decimals, so this is the $10.00 strike price).
So what Jeff’s subscribers would have done is sell the Alcoa call for May — I don’t have any way of knowing when exactly that recommendation might have been made, but if you received $708 that was probably either for one options contract at roughly $7 per share, or for 10 options contracts at seventy cents — and either would have theoretically been possible, with AA trading up to about $15 in March someone might have paid nearly $7 for the right to buy it in May at $10 … and as the shares fell considerably into expiration, dipping down near $10 in mid-May, you probably could have sold the right to buy AA at $10 for about 70 cents.
If you’re not familiar with options trading, I won’t go deep into the details but basically a typical options contract represents 100 shares of a stock — so a call option gives you the right (but not the obligation) to buy 100 shares of that stock at a set price anytime between now and the expiration date of the option contract. A put option does the same, but you buy the right to sell the stock at a set price.
And that’s what most individual investors do — they speculate in stocks by buying options, betting that the shares will either go up or down and let you get a nice big leveraged return.
But what most institutional investors and “smart money” folks do, we’re told is sell those options — that being more of the “bird in the hand is worth two in the bush” strategy, if you can sell away some of the potential advance of a stock, you don’t have to worry as much about whether or not the stock really goes up and you get a more predictable return.
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