The Corner

“Spam Works”

Scott Galupo writes:

Hey, Jonah. Re your post about spam, I saw an item in the Primary Sources

section of the current Atlantic, culled from a paper  (“Spam Works:

Evidence From Stock Touts and Corresponding Market Activity”) by Laura L.

Frieder of Purdue and Jonathan L. Zittrain of Harvard Law.

The paper looks at the phenomenon of “hot stock tip” emails. Basically the

spammers buy up certain stocks and push up their price a few ticks; then

they tout those stocks to suckers who heed unsolicited, anonymous advice.

When those suckers buy, the price goes up even more — whereupon the

spammers sell the stock and make an average profit, the paper says, of 4.9

percent in a mere two days.

The best part is that it’s legal as long as the spammers disclose their

interest (which they often do, though in fine print).

I’m in the wrong racket, to say the least.



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