Krishna Pillai

Content Marketing | Value Proposition | Salesmanship | Startup Enthusiast | Stock Market | Zumba

6:24 PM, 19th May 2018

Something I learned today about stock tips and advisory services!

I was scrolling through my mails today and I landed upon one which had this catchy subject-line:

54% Gain in just 1 month! Start Multibagger Services! (4 Day Free Trial!)

Won’t you be tempted to open the mail and see the stock that’s giving such returns?

Well, this isn’t the only stock that happened to be a multi bagger. Turns out that almost 90% of stocks recommended by this company has made money for their subscribers.

Feels like a goldmine, eh?

Moreover the messaging they have on their emails would make you want to dilute all your savings and keep it at their disposal.

It’s highly likely that if you have a demat account and have made few trades you are also a recipient of such mails and sms on a day-to-day basis.

Sometimes I receive calls from stock research companies (surprisingly all these calls are from Indore, India) asking me about my trading activities.

But wait. What if this is just another sham?

That’s why they have the 4 Day FREE Trial — exclusively for you!

I did some reading about the reality of such services and got to know that this is how it kind of works:

(Mind you; this is only one of the ways through which they dupe retail investors!)

Remember — The moment you open a demat and a trading account with your broker do not expect your information to be classified. Before you even make your first trade you’ll have a stock recommendation stating 20% returns in 3 weeks! Your details are out there, fed to these hungry sharks who are on the lookout to trap retail investors like us.

Imagine a stock advisory company XYZ having a database of around 40,000 emails (including yours).

They’ll send an email to everyone with a catchy subject line and fake money-making recommendations that they have previously given, trying to lure the readers to opt for their 4 Day FREE Trial.

Let us assume a conversion of 40% — around 16000 readers subscribe to the trial.

They will divide this list into 2 categories A & B with 8000 in each.

Next, they’ll pick up a stock which has been trading in the stock market in high volumes and see the price-trend of last few trading days. In this case let’s say a company named B.S Enterprise.

Day 1:

They’ll suggest category A to buy this stock and category B to sell (short-selling) this stock.

Their tips would look something like this:

Buy 25000 shares of B.S Enterprise at CMP (Current Market Price) of 22 with a TP (Target Price) of 27+ in 2 weeks. Potential to reach 40+ in few weeks!

(Same goes for short-selling)

Since the stock they picked was being traded in high volumes you can expect to witness a movement in the stock price. If the price moves up, A wins and if it goes down then B wins. Depending on whose favor the price is moving, that category moves up the ladder for the Day 2 Tip and the other category gets discarded.

Assuming price movement to be in favor of A, the subscribers who must have taken the trade would have made humongous profits.

The subscribers in A will be divided in 2 categories with 4000 in each and a new stock will be recommended for Day 2.

And the same process continuous till Day 4.

At the end of Day 4 — the winning category with 1000 subscribers would be left — who are most likely happy with the tips they have received so far.

Now consider this “Multibagger service” to be priced at around 20,000 for 6 months.

Let’s say, 20% of these 1000 convert as subscribers who opt for their “life-changing” advisory services.

200 x 20,000 = 40,00,000 for 6 months!

Woaaahh!

And this isn’t a single database they have with them.

Also, their email marketing and the lead-nurturing process is pretty strong. With captivating subject lines and lucrative stock picks in their messaging, it’s highly likely that a reader might at least open it once.

What about the other 15000 subscribers who they couldn’t please with their advice? They’ll be the target of this new company that’ll claim to be better than every other advisory firm.

Never ever trust stock tips/recommendations from any advisory company. Do your due research and invest at your own risk.


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