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(This article originally appeared on The DIV-Net)
I open my mailbox and I see an attractive and colorful envelope with big attention grabbing text shouting “They’re back…! Dot-Com Profit Stocks. Inside: $2 Net-stock to Blow Google away!”. I lick my lips in anticipation and tear the envelope apart throwing aside the torn paper towards the bin, not caring whether it went in or not. I feel my heart race and gulp as my trembling fingers reach inside and slowly pull out the piece of paper.
I unfold the letter and the words reveal,
“YOU can make $MILLIONS this time – Here’s how”
Yup, sounds like a marketing scam to me.
The reason I bring this up is because Scott Fraser calls himself The Natural Contrarian and a proven master of contrarian strategies. The only contrary thing about this type of investing and marketing is that it goes against all investing basics. Let’s see how this contrarian technique holds up against the logical contrarian.
Manipulation of Emotions
The dirty thing with marketing gimmicks to separate innocent people, who want to start investing or learn, from their hard earned money is that they aim and prod at your emotions. We’ve all regretted to some point not investing in Google at its IPO and this is the type of sly strategy employed.
“Many of you who hesitated and missed out during the first dot-com stock-boom of the late 1990’s on Yahoo!, Amazon, and AOL – now have a second chance for fortune with CrowdGather.”
IF you had done this, you would be better off. IF you do this, you can get rich quickly. Full of empty IF’s.
Why isn’t the fact that the majority of internet stocks went bankrupt revealed? People didn’t miss out on anything during the tech boom because too many lost everything they had by listening to such folly.
Next Never Comes
One of the biggest and simplest rule of investing is that when someone touts a stock as the “next” or “new era”, you should put your head down and run like Bolt. That stock tipper is mostly trying to get into your pockets. The stock that the report pumps up is CrowdGather (CRWG). After visiting the site and running through the SEC filings, it is clearly a don’t bother stock for any long term focused investor.
Remember when the universal remote or some other idea was supposed to the next thing? LCD’s were indeed the “next” items and it has become a standard, but it also brought about a boatload of competitors and essentially wiped out the “next” factor.
No Basics. Only Speculation.
If you or your financially less inclined family, relatives or friends come across such reports, point them to the fact that these reports have no factual information. The one I have in front of me is filled with “I project”, “I’m tell you to buy” and “you will miss out if you wait”.
Here is another sample of what I am talking about.
“Two recent developments strongly support my high profit expectations for early CRWG shareholders:
1. CrowdGather’s new management team has logged extensive histories at such media titans as Yahoo! ,AOL, LionsGate, and Playboy.
2.CrowdGather’s streamlines $65 million market cap makes the company an almost irresistable acquisition target.”
Who but speculators buy based on their hunch that it could be a takeover target? I call this hunch the “it’s time to sit on the toilet” hunch.
So it seems like this technique revolves around buying penny stocks, spreading rumors, hyping it up some more and then dump it for a personal gain.
Looking at the Natural Contrarian’s site and his buy recommendations, people who listened to him would be poor over and over again. His “recommendations” are ALL OTC, recently public, no history companies now trading around 60% lower from its initial price.
Get Rich Quick and You’ll Die Trying
It’s a perverse human nature to want things immediately. We don’t want to wait for anything. It’s been like that since we were born. This is especially more true when it comes to money and it’s a shame that too many eager people fall victim to such rubbish in the hopes of making a million dollars overnight. The sad thing is, you’ll probably die first before it happens.
Why not stick with the safe and sensible way of gaining wealth? Do you hand your money to a gambler and ask him to multiply it 10 fold the next time he goes to the casino?
I also believe that an investor’s role isn’t just constrained to building personal wealth but extends to helping others obtain financial understanding and helping them succeed financially.
[tags]natural contrarian,scam, penny stock[/tags]