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BizReport : Email Marketing : September 06, 2006

How Spammers Make Money

Spammers make money by manipulating the stock market. That’s the conclusion of a study led by Purdue University Assistant Professor of Finance Laura Frieder.

by William White

The study in which Professor Frieder was assisted by Johnathan Zittrain of Oxford University discovered an operation in which spammers buy low-priced speculative stocks off small companies and then post messages urging people to buy cheap stocks. They then watch for upward movement in the price, sell the stocks and pocket the profit.

It is believed that 100 million or around 15% of the number of spam messages sent a week promote stocks.

A junior in the school of management who has invested in the market for over two years is of the view the amateur trades is an easy prey for spammers. Kenny Blickenstaff said “many people are new and don’t really understand how fast the stock market reacts to business changes and news.”

The Purdue/Zittrain study found that on any given day a stock promoted by spammers had an 81percent chance of being the most popular on the penny stock index.

Spammers increase their investment value by nearly 5 percent while those who by the stocks they tout end up poorer.

According to Frieder the idea for the study was prompted by their experience with spam. She said her co-author was thinking about doing something useful with all the spam messages he received and after talking about it they were genuinely curious whether or nor spam pays.

Tags: speculation, stock market

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