Here's the story of a broker who attracted new clients by demonstrating his ability to pick winners every time.
How did he do it? Each month, he'd mail letters to 100 prospective clients. Fifty of the prospects would receive a letter telling them to "buy" a stock; the other fifty to "sell" the same stock.
He would then take the list of picks he got correct, split them and apply the same logic from the previous paragraph. He would continue this process for four rounds(four months). Afterward, he would send a letter exclaiming his ability to go 4/4 in his previous stock picks. Attempting to persuade the list's occupants to give him money to actively manage. And they would.
Needless to say when the broker was exposed, he was banned from the securities industry. We wanted to post this story to detail some of the crafty plans people will design to "steal" your money. If you ever hear of an investment deal that is too good to be true, perform extensive due diligence and research. Also, always take a stranger's claims with a grain of salt, no matter how credible they seem to be.
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