Boiler Room 7/17/00

On Friday or Saturday evening my wife gets a movie from Block Buster and after dinner we sit, hold hands and watch. This week she brought back one that I think every investor or anyone contemplating investing in the market should see. It is called "Boiler Room".

How many times have you been called out of the blue by some no-name broker who wants to make you rich provided you buy shares in this great new issue or some stock that is just about to "take off".

Usually they start off with do I remember he called me 6 months ago and recommended so-and-so issue that is currently in the news because it has gone up 100 or 200%. He did not make that call and if he had I am sure I would not remember it. Also the name of his firm is one I never heard of, but it sounds very legitimate and he might even say they are affiliated with Chase Manhattan Bank or some other big bank. They might have their checking account with that institution, but otherwise they have no connection with them. Now he has another recommendation that is going to do even better that that one. Yes, and pigs can fly!

If you haven't done so yet don't let him go any further. Hang up. Oh, I know you can't because your mother taught you it is rude to hang up on people. Please, this time DON'T listen to your mother. He will try to get you into a conversation by asking simple questions that must be answered with a "Yes". Stop listening. If you can't bring yourself to hang up then put the phone down and walk away. In 10 minutes he will be gone to call another sucker.

There really are boiler rooms out there selling worthless securities and everything they do is 100% within the law and 100% immoral. How do I know this? I used to own a brokerage firm and I received monthly reports from the regulatory agencies outlining charges against these shady dealers. Fortunately, I did not have those problems as I would not allow hype to open accounts.

The things being told on the phone are usually too good to be true and that is a fact. Do yourself a favor and rent that movie. Not all brokerage firms are like this, but remember my basic rule.

NEVER SEND MONEY TO A VOICE ON THE PHONE.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.

Copyright 2005

In The News:

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Why it is a bad idea to always look for outperformers while investing in mutual funds  Economic TimesOne of the most important features that any investor, wealth adviser or anyone in the financial media looks for in an investment product is its track record in ...
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Three large mutual funds opposed to L&T’s takeover of Mindtree  Economic TimesMUMBAI: Three large mutual funds holding shares of Mindtree are opposed to L&T's hostile takeover attempt of the mid-sized software company.
Mutual funds' exposure to banks hits 3-month low of Rs 1.88 lakh crore in Sept  Economic TimesMutual funds' holding of banking stocks declined by over Rs 21,600 crore to Rs 1.88 lakh crore in September, driven by the correction in equity markets.
Financial planners recommend new fund from Mirae Mutual Fund  Economic TimesConsistent performance of the existing equity mutual fund schemes at Mirae has prompted financial planners to suggest the Mirae Asset Focused Fund to ...
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At least 100 MF schemes own these stocks; that should mean something, right?  Economic TimesDomestic institutional investors have become one of the key market drivers in recent years.
How income from stocks and mutual funds are taxed for an individual  Moneycontrol.comCapital gains from transfer of unlisted share are considered as STCG where period of holding is less than or equal to 24 months, and LTCG when holding period ...
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Top fund houses are busy lapping up PSUs; what’s behind this new-found love  Economic TimesNEW DELHI: India's top three mutual funds, which manage over Rs 9 lakh crore in debt and equity assets, added a number of PSU stocks to their schemes in ...

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