financial reflections

For years I’ve seen faxes come in to work claiming to have the next big stock pick.  And for years, I’ve thrown them into the trash without a second thought - until yesterday.  That’s when I decided to buy one and see what happened.

Of course, when I say “buy one” I mean pretend to buy one.  I’m tracking the stock on paper and thought you would like to see the results of my misadventures in free stock tips.

I might have a negative net worth, but that doesn’t mean I’m a complete sucker.  I’ve seen the movie Boiler Room, and before that I was pretty sure there weren’t many charitable organizations handing out free stock tips by fax, email or phone, just so I could be rich.  I’m skeptical like that.

But I thought it might be fun to try it out on paper and see how much (if any) I loose.  I have this theory that I’m not going to be kicking myself over the easy money I could have had if I had only gotten in on the ground floor.  Even if I am, it’s only one stock, so I’m not sure how good of a representation it is.

My theory on these kinds of stocks is similar to the Cuban-esqe thought that stocks are like baseball cards.  They only have value to traders because of demand.  I think that sending out millions of stock tips is a way to raise that demand so people who already own the stock can make money selling it.

To protect the company involved, I’m not going to reveal the stock name.  But here’s my initial investment:

• 1000 Shares
• 2.90 purchase price
• $2,900 total investment

As of this morning my mystery stock was down 2 cents, leaving my down 20 bucks.  Big deal.  Maybe tomorrow it will be up five bucks.  I’ll keep you posted on the future of my mystery fax stock tip in later posts.