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Chris DeMuth Jr.
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"It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it - who look and sift the world for a misplaced bet - that they can occasionally find one." - Charlie Munger I look... More
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  • Lambs Of Wall Street 19 comments
    Jan 18, 2014 1:35 PM

    I regularly receive virtually identical e-mails along the line of,

    I have been contacted by brokerage X here in [some locale] pitching me on two stocks that they claim are going to the moon, ticker YYYY and ZZZZ. What is your opinion?

    I am not going to do any work on those. However, I would strongly recommend either ignoring the sales pitch or shorting those stocks as they are almost certainly frauds or promotions. Read The Wolf of Wall Street to learn more about that type of call. Never buy anything as a result of listening to an unsolicited inbound sales pitch. Precisely zero good investment ideas are given away in that manner.

    Do you get such solicitations? If you have a story to tell about specific fishy brokerages or stock frauds and promotions that you've learned about via sales hype, please post in the comments below.

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Comments (19)
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  • Tales From The Future
    , contributor
    Comments (4080) | Send Message
     
    It's both funny and sad to see that this pump&dump still works fine in 2014...greed is timeless.

     

    Same for penny stock handles resembling company names, both Twtr and Nest rose a couple hundred or even thousand percent after the IPO of TWTR and GOOG buying Nest (which of course is a private company with no relation to the penny stock handle).

     

    So maybe watching Wolf of Wall Street could even be educational for some movie goers...except for the hard drugs and sex abuse plus the constant swearing :)
    18 Jan, 01:53 PM Reply Like
  • Borbastic
    , contributor
    Comments (193) | Send Message
     
    I'm interested in these situations, but would never get involved. It seems like there are three different species. There are wolves (the guys running the fraud), simple dupes (lambs), and some that know its a fraud/promotion, but believe they can time the move up. (FOXES!) My point is, simply knowing it's a fraud doesn't lead to the conclusion that one should immediately go short.
    18 Jan, 01:54 PM Reply Like
  • Special Situations and Arbs
    , contributor
    Comments (538) | Send Message
     
    Chris,

     

    What did you think of the movie?
    18 Jan, 05:43 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4037) | Send Message
     
    Author’s reply » I have not seen it. I have not been in a movie theater in many years. However, I might watch it once it is out on Apple TV as I occasionally turn on a movie in the gym. It is worth watching?
    18 Jan, 06:07 PM Reply Like
  • Tales From The Future
    , contributor
    Comments (4080) | Send Message
     
    There's a lot of drugs, sex and swearing (I don't usually mind this in a movie for adults, but it's close to an overdose, sorry for the cheap wordplay).

     

    Like a constant filter on top of the storyline which includes a funny narrator addressing the audience from time to time (fourth wall).

     

    Fine performance by the cast (and I don't usually care about DiCaprio too much).

     

    Some might find the movie superficial, it only shows the criminal side, the investigation and the (naive/greedy...?) victims' sides aren't highlighted too much. This was discussed in an open letter here:

     

    http://bit.ly/1e2Y39L

     

    Still, this is a mainstream Hollywood movie taking liberties with a script, not a documentary, so I'm fine with this as long as people remember it's a movie.

     

    Three hours might also be a little long for some, but that's typical Scorsese.

     

    I would recommend the movie to everyone involved in the financial industry or investing.

     

    PS: Apparently the movie first got a NC-17 rating and was recut: http://bit.ly/1e2WFnP
    19 Jan, 12:25 AM Reply Like
  • Wall Street Teacher
    , contributor
    Comments (399) | Send Message
     
    Try Boiler Room if you want a good old fashioned Long Island pump and dump tale. Also, Glengarry Glen Ross if you are in the mood for something a bit darker.
    19 Jan, 12:35 PM Reply Like
  • TimeOnTarget
    , contributor
    Comments (2169) | Send Message
     
    @Chris --

     

    O.K., I'm going to get in a plug for actually going to the movies here. I genuinely enjoy having a decent sized DVD library, Netflix, Cable, and watching most things at home. There are, however, some movies that are genuinely worth seeing in the theater. In fact, there are some that you just plain old need to.

     

    One thing you have to remember is that there is something of a forced immersion experience attendant to seeing something in the theater. The good directors will use that to have maximum effect.

     

    The exemplar of using the effect of the movie as a medium (when seen in a theater) was Stanley Kubrick's "A Clockwork Orange." Because you are watching it on the big screen, it commands your attention, you are forced, somewhat unwillingly, but nevertheless drawn to the character of Alex. Having him narrate was a uniquely effective tool.

     

    Normally I greatly dislike narration in movies or plays. I regard narration in movies or plays generally as a crutch for those lacking the skill to communicate using the medium: Narration is for books.

     

    Kubrick, however, knew just exactly what he was doing in "A Clockwork Orange" by having Alex narrate. He was forcing the audience to identify with Alex, an experience that aroused a variety of feelings-- as it was meant to.

     

    I read the novel "A Clockwork Orange" and even the "missing" ending stuff. It still doesn't hold a candle to what Kubrick did with it: Kubrick's movie not only had extra thematic levels, but also was just stunningly more effective.

     

    But, you cannot, I repeat cannot, watch "A Clockwork Orange" anywhere but in a theater and get the same effect. It was designed to be a completely in your face experience that you couldn't escape from for a second -- and confuse you as to whether you wanted to or not. None of that works in less than a real movie theater.

     

    Well, come to think of it, you undoubtedly have a better home theater system than I do, but still, I doubt if it can compare to the just the huge, in your face experience that a movie theater offers.
    26 Jan, 12:23 AM Reply Like
  • Special Situations and Arbs
    , contributor
    Comments (538) | Send Message
     
    YES! Especially for someone who is passionate about the market. Jonah Hill is amazing. I can see some women not liking the movie but it is a reflection of the times and very entertaining. Reviews are mixed though it did get an academy award nomination.
    18 Jan, 06:22 PM Reply Like
  • Peter Larson
    , contributor
    Comments (611) | Send Message
     
    Check out TMFStockSpam on Motley Fool CAPS.

     

    All they do is red thumb (essentially short) this sort of spam. They have 95% accuracy, with an average relative underperformance of over 100%.
    18 Jan, 06:28 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4037) | Send Message
     
    Author’s reply » Thanks. Great. -C
    18 Jan, 06:29 PM Reply Like
  • earljr1
    , contributor
    Comments (265) | Send Message
     
    How do you short OTC penny stocks?
    20 Jan, 11:39 AM Reply Like
  • KJP712
    , contributor
    Comments (437) | Send Message
     
    I got a cold call on MCIG last week.At least this one has a following on Seeking Alpha in the medical marijuana field.What do you say about one hundred thousand shares? ......
    18 Jan, 07:39 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4037) | Send Message
     
    Author’s reply » Very interesting; there will be some interesting short s in that area.
    18 Jan, 07:52 PM Reply Like
  • Aharon Levy
    , contributor
    Comments (109) | Send Message
     
    While I think it's interesting to short Pink Sheets no-float microcaps, not everybody pushing questionable products is calling from a basement. Back when I had an account with Smith Barney, my chummy broker would call with regular solicitations to buy bespoke limited-time "Best Idea" fund products with sales loads of 5-6%. These weren't scams, of course, but if I remember correctly the 2001-vintage one proudly overweighted Tyco and HP--his I'm-gonna-compliment-you sales pitch was "They're priced for perfection, but you know that's what they'll deliver."
    19 Jan, 01:37 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4037) | Send Message
     
    Author’s reply » So funny. One of the more inane sales pitches that I've ever heard of.
    19 Jan, 02:33 PM Reply Like
  • Aharon Levy
    , contributor
    Comments (109) | Send Message
     
    Also, a young broker, possibly at Olde, cold called me about the Conoco IPO in 1998. No idea how he got my name (or the idea I had a penny to it then), but he wouldn't take no for an answer. After a half dozen calls, I asked him to send me the prospectus, figuring at least I could cause him some trouble as payback. He assured me it would go in the mail that day. Three weeks later I received an envelope containing...a torn cover sheet from the prospectus, and nothing more.
    20 Jan, 01:32 AM Reply Like
  • TimeOnTarget
    , contributor
    Comments (2169) | Send Message
     
    Hmmm. That Conoco IPO might actually have been a good one to get in on. I think if you looked at the price it went for then, looked at what it was when they merged with Phillips in 2002, looked at the combined company, and how much you would have gotten for your Conoco stock as a result of the merger, looked at the dividends you could have gotten from both Conoco and ConocoPhillips over the intervening period, the stock you would have gotten for each share of Conoco, looked at the stock split in 2005, looked at the recent spin off of Phillips and looked at the current prices of both Phillips (PSX) and ConocoPhillips (http://bit.ly/t7heBO), I'm thinking you are looking at basically a 7X gain in appreciation since 1998, not counting dividends, which were substantial, at minimal risk relative to most companies.

     

    Yeah, normally I wouldn't trust anyone that called up or anything like that, but I happen to have a little first hand knowledge about how the Conoco IPO worked out.
    26 Jan, 01:50 AM Reply Like
  • Aharon Levy
    , contributor
    Comments (109) | Send Message
     
    Absolutely! And I did subsequently buy some Conoco and COP (though made out less well than I would have done at the IPO, albeit with a shorter holding period). It was more that a legitimate offering was being sold as if it were a boiler room special.
    26 Jan, 12:04 PM Reply Like
  • TimeOnTarget
    , contributor
    Comments (2169) | Send Message
     
    @aharon --

     

    With you there. First rule has gotta be to be skeptical. If this is so great, why are you telling me instead of doing it yourself . . . .

     

    Chris did a really funny piece on IPOs a while back. ("Why are these people cheering? Because you now own something that they used to . . . ." or something to that effect.)

     

    But, in Conoco's case there was a bit of history. DuPont acquired them essentially as a "White Knight." DuPont kind of used them as a bit of a cash cow and didn't really grow the business. During the period prior to the spin-off DuPont's stock price was taking a bit of a beating-- so that may have contributed to it. Plus, Conoco was in a bit different stage of development than most IPOs -- like an extra hundred years or so of operations.
    26 Jan, 02:39 PM Reply Like
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