Devil's Advocate: Fortune telling spam

There are plenty of types of spam but one breed annoys Martin Brampton more than most. Mysterious emails about investments? Don't make him laugh...

Fraught questions about Microsoft and open source pushed me to try to lift the veil that hides the future. Will we see dramatic changes on the desktop? No doubt that question will recur but recently I have been experiencing a much more prosaic kind of fortune telling. It crops up in my emails almost daily, although I never know how I came to be selected as a recipient.

It is intriguing to see how the character of exhortatory emails has changed over the last year or two. Naturally there is still the occasional invitation to make huge amounts of money for next to no effort. They are, as you would have thought everybody would know by now, either based on the chain letter principle or they are downright frauds.

The more subtle approach is the attempt to sell advice. Perhaps in current parlance, one ought to describe it as selling intellectual property, although that might give it too much credibility. Judging by the mail I receive, the most popular area in which to sell advice is investment. And that is where the changes are most notable.

Not so long ago, all the investment advice emails wanted to tell you about companies in which you should invest. Naturally, the emails were only tasters and they never actually told you where to put your money. Instead they offered histories of past recommendations that had yielded impressive profits. The suggestion was always that if you subscribed to the advice on offer you would be able to invest your hard earned cash in shares that would make you rich.

Now, the story is quite different. The emails come from an altogether different bunch of people. Or is it that the same people have changed their names and set up new outfits? They emphasize that most investment advisors have been reluctant to tell investors when to sell. Just like the earlier emails, they refrain from actually telling you to sell particular companies' shares, instead proclaiming their past advice to sell shares that have since fallen disastrously.

There are plenty of obvious problems with all these offers of advice. Generally, by the time investment advisors have figured out that a particular share is going up or down, it is too late to do much about it. If it is on the way up, you have probably already missed the best gains. Although there may be further gains, those are likely to evaporate in a subsequent downturn. Likewise, when shares are falling, they often fall too fast for the average investor to take action.

Inevitably, though, the biggest problem with telling the future is that people cannot do it. Those that make claims in that respect typically rely on pointing out how their past predictions have succeeded. They gloss over the predictions that failed. And as the investment brochures sometimes say in very small print, the past is not necessarily a guide to the future.

Moreover, one is entitled to wonder why anyone who really does have an edge in predicting the future would want to sell advice. When share prices are falling dramatically, as they have recently, the people who can tell you which share to sell have an alternative route to making much more money. The classic behaviour of the market 'bears' is to sell those shares short. That is, to sell shares you do not own on the assumption that you will be able to buy them more cheaply in future to balance your books. The only problem is that you need to be quite sure which shares will fall.

So it seems that you need to exercise considerable caution in your dealings with anybody who claims to have some kind of insight into the future. Even me.

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** Martin Brampton is a director and founder of Black Sheep Research (www.black-sheep-research.co.uk ), an independent consultancy providing research, writing and speaking services on a wide range of business and technology subjects. Martin was previously a director at Bloor Research, and has worked with IT as a user and analyst for over 20 years. He is a frequent contributor to silicon.com's Behind the Headlines TV programme and can be contacted at silicon@black-sheep-research.co.uk .