Original Cin

A long time ago, I saw an ad for a website on Fark. The site was in a blog format, well before Wordpress and Blogger were hits, and offered daily stock picks. I was intrigued, but skeptical (no, the site was not Fool.com, which has never advertised on Fark to the best of my knowledge). After a week or so, the previous entries were updated to show the change in price. The performance of the past picks seemed impressive, but I easily smelled a scam, so I kept on eye on the site.

Were the picks actually chosen after the fact? Nope, a few days of watching the site confirmed that picks were made in advance.

Was this a pump-and-dump? It seemed unlikely to me that a few hundred Fark readers had enough money to significantly change the prices of the stocks being highlighted, even if all of them had decided to bet their retirement funds on it — these stocks were cheap, but didn’t have market caps that were that small.

After about a week of watching and wondering just what was going on (and independently checking things on Yahoo and in a spreadsheet), I got my answer, as one or two entries that didn’t perform so well were silently dropped from the site. The picks were simply stocks that had a great deal of volatility in a generally bull market — and only the winners (or at least not-so-bad losers) were reported. I’m fairly sure the entire site was a poorly thought-out setup for a pump-and-dump to come, which probably failed miserably due to a poor choice of target (Fark readers? Come on…) The entire site went dead some time later.

Which brings me to the Motley Fool. My father loves the Motley Fool. I’m not so sure. It hasn’t really been that long since they were pushing their Foolish Four agenda. Basically, I can’t help but wonder if perhaps the Fool is a more sophisticated scam, and if they’re basically a portfolio of portfolios for publication and sale. The losing portfolios and strategies are killed, much like the Foolish Four. There are currently 7 products, all with positive performance, listed on Fool.com, along with four others with no performance given. Call me suspicious, I know of at least one loser not listed. Who knows what else has been tried and never seen the light of day. With the massive number of recommendations made on the site, who knows what the real performance of the investment brains behind the Motley Fool really is?

Here’s one thing that’s certain: money that you spend on investment advice cannot actually be invested itself. Yes, for a large amount of money to invest, it’s a relatively minor cost. But is the benefit received really worth it? How can you tell?