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You are here: Stocks Investing Guide >
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Fraud > Reading Internet Newsletter
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Reading the Internet Newsletter
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What newspaper would you
rather rely on for well-researched news as opposed
to unfounded rumors; The New York Times, or a
paper you've never heard of? You would probably
choose The Times, because it has a history of
journalism reaching back decades. You know it
hires journalists, makes and maintains contacts,
and sends its press corps all over the world for
news. You might not always agree with The Times,
but you know what and where it is. So why would
you choose an online newsletter that's put out by
a company you don't know over a newsletter from an
established company with a
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experienced personnel
and a good track record? Maybe it's something intrinsic
to the human being that we like to try new things, to
take some risks. But history shows that taking risks
with your money is usually the way to lose it. And
choosing an online newsletter that purports to give you
"news" or "insider tips" in regards to investing your
money is taking a risk you can't afford to lose.
The fact is, online newsletters, even ones sponsored by
legitimate companies, exist to make money for the
company. In a best case scenario, they do so by
educating consumers to make good choices, and when the
company's product is a good choice, it all works out
just fine. But even honorable companies aren't above
doing things like placing advertisements on their
websites for things that cost more than they should, or
that contain hidden fees.
Advertising is a lucrative sideline for many websites,
and it's up to the reader to decide whether to be swayed
by advertising or not. If you look at reputable, online
financial and investing websites, you will still see ads
for brokers who charge high commission fees. So you
should always approach online newsletters or chat-rooms
with the understanding that, while the best ones may
offer you information, there will also be opportunities
for you to spend your money. In some cases, that's fine.
But when you're talking about an investment newsletter
from who-knows-where by who-knows-whom, you can be
pretty sure that it exists to tout investments. And
those investments may not be legit. In fact, online
newsletters may be run by thieves whose goal is to
convince you that by investing in their "corporation",
you're going to get a much bigger return on your money
than you would in "traditional" (honest) investments.
When you're reading an online newsletter (or any
newsletter!), you should be asking yourself how
companies featured in that issue got to be big news that
month or that week. It's entirely possible that they
paid a higher advertising fee to the newsletter in order
to be the "featured company", and that the accompanying
recommendation to buy their stock should be taken with a
big grain of salt (a truckload, in fact). And an article
that picks stocks for you is also suspect: is the writer
a known and established broker or fund manager with a
wide following and a good history, or some guy writing
in his underwear from his mother's basement? Is this
person seriously evaluating the stock based on its past
performance and breaking company news, or will he or she
get a commission from the "company" if you buy the stock
based on the newsletter article you read?
There's another possibility: an online newsletter can
exist for the sheer purpose of creating a falsely high
price for stocks that have been bought by the person
writing the newsletter. If I buy a couple of thousand
shares of a cheapo company that's going nowhere, I could
write a glowing recommendation, throw in an insider tip
to my newsletter suckers –umm, readers, drive up the
price, and sell my stock to my readers at a much better
price than I should have gotten. People do that. They
really do.
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How to stick to a household budget
and have extra
money for investing
1. Customize your budget with your current needs, wants and future goals in mind.
2. Try to think if your budgeting plan as a "spending" plan rather than penny pitching.
3. Sit down and rationally discuss budget goals and spending limits with your spouse. You are bound to disagree somethere, but it important to take the time to find common ground.
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