We have had a long line of questions about the misleading “Internet Royalties” teaser from The Wealth Advisory, so I’m going to re-share that one.
My initial solution for this teaser pitch appeared at the tail end of a Friday File for the Irregulars (our paid members) on September 12, 2014, so many of you will have seen it before…. though they must still be actively promoting it, because the questions continue to pile up. The story hasn’t really changed since then, nor has the original ad. What HAS changed is the stock price — the shares of the one specific company they hint at, and which I continue to own personally, are up almost 50% since they started teasing it.
So it’s only fair to warn you that although this is still among my favorite stocks, and still a top-ten holding for me personally, it’s a bit more expensive than the $35 they continue to tease in the ad, it’s well above $50 today and I have sold covered calls at $60 in recent months (currently I am long the stock and those calls have expired, I may sell covered calls again if the price is right).
Yes, this “Internet Royalties” stock is actually a Real Estate Investment Trust (abbreviated REIT), and it will probably trade like a REIT during times of interest rate upheaval, so we may see better buying opportunities as the Fed shakes the tree for investors in REITs and other income-focused investments. What follows has not been updated or revised since September, 2014 but I have added an excerpt from my recent note on this stock at the end (that note is from when they raised the dividend in December, the price was right around current levels then) to give you an idea of my current position if you’re curious.
— from 9/12/14 —
This is a pretty thickly obscured teaser, with what looks to me like a highly inappropriate pitch for what turns out to be a stock that I think is just fine (I should think it’s fine, I own it and I’ve suggested it to the Irregulars in the past as well).
Whatever is it? The suspense is killing me!
Here’s the pitch:
“How to make Netflix pay YOU ‘Internet Royalties’ for EVERY movie it rents
“Thanks to a new profit loophole, you can now earn ‘royalties’ of up to $48,000 per year from any of the Internet’s top 200 retailers….
“Netflix, the world’s leading online movie provider, rents roughly 200,000 movies per day.
“That amounts to more than 8 million movies per month.
“And thanks to a now-available profit loophole known as ‘Internet Royalties,’ you can legally skim a small amount of cash off of each one of those 8 million rentals and deposit it into your bank account.
“Now, the portion you earn per rental won’t be a lot. In fact, it’ll likely amount to something in the neighborhood of 1/20th of a cent.
“But while that may seem like a very tiny amount — and it is — consider this:
“If you were to earn just 1/20th of a cent EVERY time Netflix rents a movie this month, you’d pull in $4,000, free and clear.
“Do it every month, and you’re looking at $48,000 per year in pure profits.”
Sounds exciting, right? As you can tell from the fact that I’ve owned Altius for so long and from some of my other holdings, I’m lazy at heart and just loooove royalties — there’s something so very compelling about earning money on a business that requires no work from you. So the idea of “Internet Royalties” struck a chord.
Might there be some patent that all the Internet companies have to license, enriching some lucky patent holding company?
Might there be a chip design, like those of Qualcomm (QCOM) or Arm Holdings (ARMH), both of which have been pitched as “royalty” companies before, that we could stretch to say generates royalties based on this internet retail traffic?
Maybe something exciting we’ve never even heard of?
Hope springs eternal.
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Here’s more enticement:
“You can collect these ‘royalties’ from ANY of the Internet’s top 200 retailers… all at the same time if you wish.
“Take Amazon, for example…
“Though it keeps its sales numbers under lock and key, I was able to uncover that the company ships approximately 196 million packages per year.
“Now, thanks to ‘Internet Royalties,’ you can collect a small sum of cash for EVERY package it sends out.
“Again, the ‘royalty’ will likely amount to about 1/20th of a cent… but if you do the math, that works out to a cool $98,000 per year just from Amazon ‘royalties’ alone.”
OK, so we’re talking $48,000 or $98,000 a year, from two of the hottest stocks in the world in Netflix and Amazon? How can readers not be enthused and line up to subscribe to The Wealth Advisory to learn about this secret!
Well, perhaps it’s because that part is mostly ridiculous. Do we get any real clues to help us identify which stock this is that gets a “royalty” on pretty much everything that happens on the internet? Could such a thing really exist?
“collect these “royalties”…
“EVERY time someone logs into Facebook
“EVERY time someone buys a Microsoft product online
“EVERY time someone buys a Chromecast adapter from Google’s website
“EVERY time someone purchases a Xerox device on the Internet
“EVERY time someone buys a Disney DVD online”