Comments on: Stock Scams and Pascal’s Triangle http://www.ooblick.com/weblog/2007/01/27/stock-scams-and-pascals-triangle/ All the etcetera that's fit to read. Tue, 31 Jan 2012 13:31:01 +0000 hourly 1 http://wordpress.org/?v=3.1.1 By: Jack Payne http://www.ooblick.com/weblog/2007/01/27/stock-scams-and-pascals-triangle/comment-page-1/#comment-32543 Jack Payne Sun, 29 Jul 2007 21:01:17 +0000 http://www.ooblick.com/weblog/2007/01/27/stock-scams-and-pascals-triangle/#comment-32543 <p>I recently wrote an article on this scam. In my case I cited a drop from 80 to 40 to 20--to names and phone numbers taken from the Phone Book and Directories. For a thinly traded stock off the Pink Sheets, for example, that's enough. It only takes a few suckers running to their brokers to buy to jack the price to a point of profits for the con man maniupulator.</p> <p>--Jack Payne</p> I recently wrote an article on this scam. In my case I cited a drop from 80 to 40 to 20–to names and phone numbers taken from the Phone Book and Directories. For a thinly traded stock off the Pink Sheets, for example, that’s enough.
It only takes a few suckers running to their brokers to buy to jack the price to a point of profits for the con man maniupulator.

–Jack Payne

]]> By: arensb http://www.ooblick.com/weblog/2007/01/27/stock-scams-and-pascals-triangle/comment-page-1/#comment-11456 arensb Fri, 09 Feb 2007 02:29:35 +0000 http://www.ooblick.com/weblog/2007/01/27/stock-scams-and-pascals-triangle/#comment-11456 <p>I'm a bit disappointed that people seem to be missing the point, concentrating on the scam and not the math. This is an ancient scam, and I guarantee you that the FCC knows all about it. I was just amused to find Pascal's triangle in such an incongruous setting.</p> I’m a bit disappointed that people seem to be missing the point, concentrating on the scam and not the math. This is an ancient scam, and I guarantee you that the FCC knows all about it. I was just amused to find Pascal’s triangle in such an incongruous setting.

]]> By: We are also … Unhindered by Talent » Blog Archive » Math is for people who don’t want to be suckers http://www.ooblick.com/weblog/2007/01/27/stock-scams-and-pascals-triangle/comment-page-1/#comment-11438 We are also … Unhindered by Talent » Blog Archive » Math is for people who don’t want to be suckers Thu, 08 Feb 2007 19:33:49 +0000 http://www.ooblick.com/weblog/2007/01/27/stock-scams-and-pascals-triangle/#comment-11438 <p>[...] Ooblog has a cool post about the mathematics of a conceptually clever, if practically difficult scam. I’ll let you go there for the details and his nifty diagrams, but the short version is that you make a bunch of simple predictions about (roughly) 50/50 events to a group of people in a way that at least a few of them heard (almost) entirely correct predictions. Once you’ve convinced that small subset of your predictive prowess, you tell them that they’ll have to pay handsomely for any further predications. [...]</p> [...] Ooblog has a cool post about the mathematics of a conceptually clever, if practically difficult scam. I’ll let you go there for the details and his nifty diagrams, but the short version is that you make a bunch of simple predictions about (roughly) 50/50 events to a group of people in a way that at least a few of them heard (almost) entirely correct predictions. Once you’ve convinced that small subset of your predictive prowess, you tell them that they’ll have to pay handsomely for any further predications. [...]

]]> By: I am ... unhindered by talent http://www.ooblick.com/weblog/2007/01/27/stock-scams-and-pascals-triangle/comment-page-1/#comment-11358 I am ... unhindered by talent Wed, 07 Feb 2007 06:51:28 +0000 http://www.ooblick.com/weblog/2007/01/27/stock-scams-and-pascals-triangle/#comment-11358 <p><strong>Math is for people who don’t want to be suckers</strong></p> <p>Ooblog has a cool post about the mathematics of a conceptually clever, if practically difficult scam. I’ll let you go there for the details and his nifty diagrams, but the short version is that you make a bunch of simple predictions about (rou...</p> Math is for people who don’t want to be suckers

Ooblog has a cool post about the mathematics of a conceptually clever, if practically difficult scam. I’ll let you go there for the details and his nifty diagrams, but the short version is that you make a bunch of simple predictions about (rou…

]]> By: Phi (Nic McPhee) http://www.ooblick.com/weblog/2007/01/27/stock-scams-and-pascals-triangle/comment-page-1/#comment-11356 Phi (Nic McPhee) Wed, 07 Feb 2007 06:35:52 +0000 http://www.ooblick.com/weblog/2007/01/27/stock-scams-and-pascals-triangle/#comment-11356 <p>Actually, I think that Cyde is giving the suckers too much credit. Remember that there are people out there that fall for Nigerian oil scams, and those are about as transparent as it comes. People also presumably fall for some pretty lame phishing scams, to judge by some of the junk that ends up in my mail spool.</p> <p>I think the hard part (which Cyde does raise) would be holding their attention over the 10 or so e-mails and have them remember that you've been so brilliant. Making up bogus but vaguely plausible justifications would probably just be a matter of stringing together a bunch of market buzz words, and making your "successes" sound significant is presumably just a matter of spin. I'm sure that over 10 predications you could probably make claim like "If you'd invested $X according to my suggestions over the past two months, you'd have a return of Y%!!!". (Actually, that might be a way to continue to hold their attention. On all but the first "predication" e-mail you could include a claim of that form.)</p> <p>This does, however, indicate a problem with the original system, since you absolutely need the one sucker to stay with you to the end. If you assume a certain failure rate due to spam filters, short attention spans, basic understanding of the market, generally suspicious natures, etc., then you really need the higher return approaches (like going for the 7 out of 10 folks) for any sort of reasonable return. You might even do better with the 7 or 8 out of 10 folks, since I'm sure at least <em>some</em> people will be very doubtful of a <em>perfect</em> track record.</p> <p>Very cool bit of math - thanks for sharing!</p> Actually, I think that Cyde is giving the suckers too much credit. Remember that there are people out there that fall for Nigerian oil scams, and those are about as transparent as it comes. People also presumably fall for some pretty lame phishing scams, to judge by some of the junk that ends up in my mail spool.

I think the hard part (which Cyde does raise) would be holding their attention over the 10 or so e-mails and have them remember that you’ve been so brilliant. Making up bogus but vaguely plausible justifications would probably just be a matter of stringing together a bunch of market buzz words, and making your “successes” sound significant is presumably just a matter of spin. I’m sure that over 10 predications you could probably make claim like “If you’d invested $X according to my suggestions over the past two months, you’d have a return of Y%!!!”. (Actually, that might be a way to continue to hold their attention. On all but the first “predication” e-mail you could include a claim of that form.)

This does, however, indicate a problem with the original system, since you absolutely need the one sucker to stay with you to the end. If you assume a certain failure rate due to spam filters, short attention spans, basic understanding of the market, generally suspicious natures, etc., then you really need the higher return approaches (like going for the 7 out of 10 folks) for any sort of reasonable return. You might even do better with the 7 or 8 out of 10 folks, since I’m sure at least some people will be very doubtful of a perfect track record.

Very cool bit of math – thanks for sharing!

]]> By: SirTech http://www.ooblick.com/weblog/2007/01/27/stock-scams-and-pascals-triangle/comment-page-1/#comment-11095 SirTech Fri, 02 Feb 2007 20:46:40 +0000 http://www.ooblick.com/weblog/2007/01/27/stock-scams-and-pascals-triangle/#comment-11095 <p>It's still a nice mathematical model.</p> It’s still a nice mathematical model.

]]> By: Cyde Weys http://www.ooblick.com/weblog/2007/01/27/stock-scams-and-pascals-triangle/comment-page-1/#comment-10728 Cyde Weys Sun, 28 Jan 2007 04:33:29 +0000 http://www.ooblick.com/weblog/2007/01/27/stock-scams-and-pascals-triangle/#comment-10728 <p>Nice idea. Of course, none of the messages could be eaten by spam filters, and you'd have to have some sort of way to get the people to realize that you'd ended up sending them so many predictions; most people wouldn't pay attention to these kinds of emails.</p> <p>Also, I think the chance of giving a correct and useful prediction a bit less than one half. If you just say "the stock will go up" or "the stock will go down", chances are it will end up doing one or the other, but only to a moderate degree, to the point where the prediction isn't really all that mind-blowing. "Ohhh, you said the stock would go up, and a month later, it's up by 3%. Yaaaaaaaaay, go you." They'd have to be some pretty damn good predictions to be noticed, e.g. predicting a stock will hit a certain price point and then being correct, or predicting significant movement in the price and being correct about that.</p> <p>And finally, you'd need to base your predictions on something that sounds reasonable. If you just say up or down, but without any sort of justification or reasoning, you will just be ignored, and very few will pay money for it - after all, it really would just sound like you were guessing. Coming up with convincing rationale for your stock picks would be difficult.</p> Nice idea. Of course, none of the messages could be eaten by spam filters, and you’d have to have some sort of way to get the people to realize that you’d ended up sending them so many predictions; most people wouldn’t pay attention to these kinds of emails.

Also, I think the chance of giving a correct and useful prediction a bit less than one half. If you just say “the stock will go up” or “the stock will go down”, chances are it will end up doing one or the other, but only to a moderate degree, to the point where the prediction isn’t really all that mind-blowing. “Ohhh, you said the stock would go up, and a month later, it’s up by 3%. Yaaaaaaaaay, go you.” They’d have to be some pretty damn good predictions to be noticed, e.g. predicting a stock will hit a certain price point and then being correct, or predicting significant movement in the price and being correct about that.

And finally, you’d need to base your predictions on something that sounds reasonable. If you just say up or down, but without any sort of justification or reasoning, you will just be ignored, and very few will pay money for it – after all, it really would just sound like you were guessing. Coming up with convincing rationale for your stock picks would be difficult.

]]>