STABLEBOY SELECTIONS

The Sleazy Side Of Wall Street: I Interview A Stock Promoter

Posted by Derek on January 27, 2012 · 4 Comments 

In this business, you’re only as good as your last deal. There are people that might give you some ticker symbol on a deal they did last year. But they can burn their list very quickly. A list that was hot in September might mean absolutely nothing in December. In fact, if you were to use that same list, the list might be a dud.

It’s all about timing. You might run into somebody that has a list that is hot right now. And it’s a newsletter that wasn’t even around a few months ago. They’re hot! You should use that list because it’s going to be effective.

The year’s starting now. Everybody was off for the holidays. I’m trying to see what lists have been working right now. Because there’s been inactivity from December and into January, things are kind of dead right now. In the next couple of weeks, though, we’ll learn what list is working… who’s being effective.

I’ll give you some symbols for you to follow and we can see if it works out.

The key is knowing beforehand. If somebody gives you a symbol… tells you there’s going to promotion next week and then you see that the deals work and there’s liquidity and activity that wasn’t there before, and you were told by this group beforehand, then you know that this group was responsible. However, after the fact, you’ll find a lot of people that want to take credit for a promotion that they had nothing to do with. Maybe they heard something about it while it was happening. They just jump on the bandwagon.

These promotions are expensive. Usually the rate is 5 to 1. Meaning if you’re expecting to move $500,000 worth of stock, you’re gonna have to pay $100,000. Usually these promotions are paid for by a third party that has a position in the deal. They try to get liquidity for themselves.

In the past, promoters would get paid with free trading. Usually these promotions are paid for in cash. It all depends on the deal.

The SEC has created a situation where the availability of free trading stock has been minimal. The ability to DTC the stock has been restricted through rules. Now it’s difficult to acquire that free trading paper for promotions. What has to be done is full disclosure. If a newsletter promotes a stock they can have a great writeup, but at the end they have to make a full disclosure about what was paid that writeup. Who paid what? As long as that’s done, that’s fine.