If news that 11 spammers have been indicted over pump-and-dump stock schemes doesn’t make you even more skeptical of financial tips from strangers, maybe the following story will.

I received this message from TC through Zecco this morning:

Hi, new to investing and was wondering if you would give some tips which would be a good newsletter to subscribe to for my short and long term trading? Is this robot Bull**** or does it work. Thanks for your time.

The “robot” TC is describing is advertised as a Google contextual ad showing at Zecco (pictured atop) and a clickthru leads to the site along the right DayTradingCoach.com (sorry, no link).

I had never heard of this program but am immediately skeptical of any deal which is presented like this on a web page. It’s in the whole get rich quick format which you see on thousands of different one page pitches. Too many sites which use this format have gotten rich off selling information that can usually be found with some specific internet searches, not rich from the information itself.

Being a geeky guy, I was intrigued if I could find this “robot” for sale anywhere. Can you actually buy the “robot?” It doesn’t appear from my searches that you can, but hey, you can buy a newsletter.

Surprise, surprise, all that Michael and Carl want is your email address and name. There’s a “don’t worry we won’t sell your name and address” disclaimer at the bottom of the page. I decided on TC’s behalf to enter in a specially tagged email address and see what their email autoresponder sent my way.

The first email was a validation link from somebody named “Jens Clever.” This isn’t the Beav’s mom (June Cleaver), and was coming from the following address:

Trading Coach LLC
100 Wall Street, New York, NY 10005, USA

Before clicking the validation I would be giving this organization permission to send me information, I wanted to sniff around a bit more. I was on a mission to find this stock robot promised in the Google served ad, not be sent in a circle buying into newsletter offers. I perform some Google searches for “Trading Coach LLC” and see what others on the web were saying. I was led to the site spamstocktrader.com which tracks a fictitious portfolio of buying and selling spam stocks. Now check out the email disclaimer reposted by spamstocktrader (emphasis mine):

You are hereby advised that Daytradingcoach.com / Trading Coach LLC / Jens Clever is receiving a cash fee of two thousand and thirty two dollars from the company shown above (or its agent) as compensation for the distribution of this email.

$2,032 for distributing information about a stock trade in an email. TC, are you paying attention to this? You don’t need to be a farmer to smell this manure. No thanks, Jens Clever, I passed on giving you my email address so you could send me stock tips that you were being paid to put in emails.

The spider web of email finance newsletters
Now back to the original web page. Page two was another web page going on and on about a (second?) newsletter. Imagine that, another page with another sales spiel for, yes, a newsletter selling hot stock tips.

But where is this amazing “robot” that the ad teased? Apparently the “robot” is just used by the people who write these emails? Is it a “robot” that must only output information when money is scanned into it?

Sorry there is no bot for sale, only a newsletter with “468 spots left” so act quick! I wonder if the next prospect who comes along sees 468 spots left too or is this some random number for each prospect? Are you kidding? A newsletter with a limited number of subscribers? I’ve never heard of any email newsletter that was only allowed to a limited number of subscribers, have you? Digital limited, I guess, just don’t expect any of those subscribers to forward to their friends and family.

And then another request for a name and email, only this time no disclaimer that my name and email address wouldn’t be whored out:

Still only interested in the robot, not subscribing to some newsletter. I passed on filling out the second email. Ironically enough, Michael’s office is in downtown Seattle “across from City Hall” according to the web page at the following address:

Global Marketing Company LTD
93 S. Jackson Street #56595
Seattle, WASHINGTON 98104-2818, UNITED STATES

Oddly, the phone number offered isn’t a Seattle-based 206 area code number, it’s a number from the UK. . Here’s a link to a Google hybrid map of the area or embed below for those with readers that allow IFRAME:

View Larger Map

Michael offers availability of his physical address to the lifetime subscribers of his newsletter. Pay only $47 and you can stop by and see him during office hours any time. I should go down to 93 S. Jackson Street #56595 and see what’s actually there. Being it’s Sunday, it would have to be a work day. Maybe someday when I’m down that direction I’ll drop in and see if Michael is available.

Moral of the story for TC and others
I’m sure by now TC who I’ll be pointing to this post in a response will see what you need to do with advertisements and offers: verify the information and sources are credible. Perform Google searches and see what others are saying about the service. Due diligence.

I’m not suggesting there aren’t any stock newsletters or that the ones mentioned above might occasionally offer stocks you can actually make money by following their tips but you have to ask yourself if those tips were so great overall, so irresistibly financially attractive, why would they be selling the information? Wouldn’t they would be using those tips to make themselves a fortune and not be focusing on the very profitable business of getting paid to share these stocks in paid newsletters?

In our ongoing stock competition between my wife and I, both our portfolios are available for the world to see for zero, nadda, nothing, not even one penny. Open, transparent and including dollar amounts, # of shares when we bought and when we sold, and even notes about each trade. I’m far and away no stock expert and don’t write or sell newsletters offering stock tips, but I’m happy to offer three common sense guidelines for those new to stock investing: research, research, research.

Yes, that’s the same word repeated, but it’s the truth. TC, and friendly readers, if I was to trust somebody online that I didn’t know with making financial decisions, I’d look for a similar level of transparency about what stocks are being bought and sold. I’d examine the history and compare that to the information being shared in his/her/their newsletter. I’d perform Google searches and see what others who bought these newsletters are saying and how transparent they’re being about their own results from following the advice. Research, research, research.

Let’s close by going back to TC’s questions at the top of this post. I don’t subscribe to any paid stock newsletters so I’m not a good source to ask for what the best ones out there are for short term and/or long term trading. I do most my research through the search engines, analyzing companies including both past and recent news articles. In some cases my direct customer experience will compel me to buy or sell a stock.

As for if the “robot” mentioned in the ad is BS? Draw your own conclusions from the information available. Speaking purely for myself, if I could buy this bot somewhere and it wasn’t prohibitively expensive, I’d try it out and share the results — for free — not in any paid newsletter.

Maybe some readers have had positive experiences with paid newsletters? I understand Fool.com has a paid newsletter. At least that’s a name that’s been around awhile, TC, but no clue as to how good or bad the performance has been there. Just be careful out there. That’s the best advice any stranger or friend can give you involving any financial tip on the web.

Congratulations to Kara for turning her $500 deposited in July 2007 into $544.93, a 8.99% return in our 2007 stock competition. She had better performance than me that ended 2007 with $522.78, a 4.36% return. Here is Kara’s competition portfolio:

Here is my competition portfolio:

We both traded 11 stocks during the time, with her still holding one (JOSB) and me holding two (ZL which is way down and NLY which is up). Since our balance is under $2,500 per the new Zecco rules any trades we make now will incur a $4 commission.

Hypothetical: if we had paid $4 Zecco commissions on each trade
To illustrate how much commissions can negatively impact a portfolio, paying $4 commissions on all our 2007 trades would have resulted in an overall loss for both portfolios. Since the commission applies to both buy and sell: I had 11 buys and 9 sells = 20 total trades. Kara had 11 buys and 10 sells = 21 trades.

Me: 20 trades x $4 = $80
K: 21 trades x $4 = $84
= $164 commissions divided into total of both portfolios: $1067.71 (15.36% commissions)

And instead of a balance of $1,067.71 we’d only have $903.70 and be sitting on two of three stocks that are currently in losing positions. Using that scenario it would have been better to put the $1,000 in a savings account than play the stock market. Although this is on a smaller money scale, it shows how difficult the stock market can be to make money. With the addition of the commission in 2008, it’s going to be even more challenging.

The 2007 prize
When asked what she wanted as a prize for beating me in the 2007 competition Kara replied, “take our kids shoe shopping.” Man, I got off easy. I was willing to buy her something for at least the difference between our portfolios. (Note: I still will).

Speaking of the kids, they don’t go back to school until tomorrow? Strange. Why aren’t they going back today? Is there an assumption this is an after New Year’s travel (or recuperation for those who partied) day?

2008 competition begins
We’re going to continue our competition into 2008 with the same setup. As for prizes, same deal: if she wins again, I’ll buy her something using the value of the difference in our portfolios or vice versa.

You are welcome to and encouraged to follow along with the trades we’re making on our Google Finance shared page. The quotes are delayed 20 minutes.

I also am sharing my competition trade activity through Zecco social (my wife currently is not), which provides third party verification that, yes, I am buying and selling the stocks listed on the Google Finance shared page. Zecco doesn’t actually show the dollar amounts or number of shares.

With my permission, they picked me as one of their featured investors (pictured above), thanks Zecco! You can add me as a friend, if you like, from my Zecco profile page.

While on the transparency front, as of this writing I also own the following stocks that are not part of our ongoing competition and are not traded through Zecco: AAPL, EXPE, GOOG, IACI, IGT, SHOR, VCLK and YHOO. For newer readers, I do disclose in each blog post where relevant when writing about these companies.

Free real time stock quotes
If you wanted to see a more real time view of either a real or fantasy stock portfolio you could use something like freerealtime.com.

I used Free Real Time with the Apple Web Clip function in Safari to make a dashboard widget and just have to hit the Apple key + R to refresh to see how the portfolio is doing during trade days. Since my main machine is Vista, I wonder if there’s a Vista gadget that does something similar? If you know of one please let me know in the comments.

Overall I’m satisfied with the results in 2007, especially with the instability of the market the last six months, but I’d like to see at least either my wife, I or both get over $1,000 by the end of 2008. If our portfolios combined a year from now could reach the $2,500 minimum, even better.

How did your portfolio(s) perform in 2007? No need to share dollars, but percentages would be nice. Happy, unhappy or satisfied?

The day after Christmas is as good a time as any to go over the $200 mark for the first time and now Apple (AAPL, disclaimer: I own stock) is part of the 200 club. I’ve been watching here and there this morning waiting to see this happen.

Apparently news that Apple cut a deal to get to the Apple rumor site Think Secret shutdown has had no bearing on the stock price, nor the fact that Leopard crashes more than Vista (for me anyway, YMMV).

2007 has been an outstanding year for AAPL stock performance, making the list of top tech performers for the year at +116%. Apple was beaten by Amazon +120% and Gamestop +121%.

The roller coaster markets continue on Wall Street. The definition of a recession according to mcwdn.org:

A time of less business activity, usually lasting at least three quarters of the year or nine months.

And according to Morgan Stanley, a full recession alert is here for the US economy:

Morgan Stanley is the first major Wall Street bank to warn that it is may now be too late to stop a recession, though most have shifted to an ultra-cautious stance in recent weeks.

The bank doesn’t think Asia and Europe will help this time around. Yesterday, the market tanked on news that only 25 basis points (.25%) were dropped in the interest rate instead of a hoped for 50 basis points (.50%), but today is rebounding a little bit on news that Federal Reserve plans to inject billions of dollars into the system.

What is worrisome to a layman in finances like me is how they’ve done this several times and it’s been little more than a temporary bandage. The market will come back a little bit and then plummet huge amounts. Then they do something, and there is a minor correction and things fall apart again. Being the holiday time of year, the best time for retail stores historically, shouldn’t the market be reflecting these times?

Or is the subprime loan mess putting coal in a lot of these businesses’ stockings? Whatever the case, the roller coaster ride continues. Investors seem at best uneasy about the current financial climate. The U.S dollar has rebounded a little bit and now is back to being worth (slightly) more than the Canadian dollar.

I don’t know if the following PayPal story qualifies as news. I’m putting it in the news category, but reluctantly so. It all sounds very familiar with a slight twist to me. PayPal has been providing one off Mastercard numbers for quite some time, not to mention full fledged plastic cards.

The new software utility, called the PayPal Secure Card, recognizes when a user lands on an e-commerce checkout page and automatically helps the user fill out the payment form in a secure way that also offers stepped-up fraud protections.

From the promo screenshot it looks like this feature will be part of a required toolbar, rather than something that doesn’t eat up more browser space. If that’s the way it works, I don’t like it already. I don’t want to have to install some space hogging toolbar for one feature. If this feature can be shoehorned into the existing StumbleUpon toolbar, great. While on this and since eBay owns Skype let’s have one toolbar that does StumbleUpon, eBay/PayPal and Skype. Save space, don’t try to liberate more browser real estate.

Duncan Riley at TechCrunch writes:

On the security front it also provides an alternative to using your actual credit card online, a secure way of using your credit card (if linked to your Paypal account) without the risk of your real details being disclosed.

Security? Will it be easy and convenient to contest bogus charges? How long will the secure created credit card number live and what consumer protections will be in place?

In March a comment here by Nelson Hochberg pointed out how difficult and convoluted it was to contest charges for these virtual cards with PayPal (emphasis mine):

The Paypal literature states that a unique credit card number is generated for each transaction implying that the and is good for only one transaction. However each generated credit and is good for three months allowing unlimited transactions up to the total amount in all of the credit cards, debit cards and bank accounts listed with your Paypal account. I had two vendors charge my Paypal Virtual Debit Card for more than the one charge I authorized.

It took me one and one half hours on the phone with Paypal to find out I have to download a hard to find form, print it, fill it out and mail it to Paypal to contest a charge. All of my credit cards allow me to contest a charge over the phone. I am still waiting to find out if Paypal will refund the unauthorized transactions. (At the end of this post are the Paypal instructions for downloading and using the form to contest transactions)

It took me another hour on the phone to find out that I can cancel a virtual debit card through a supervisor. You have to call Paypal and request a supervisor to do this.

Hopefully PayPal has refined this process for the PayPal Secure Card because if vendors can charge more than authorized and it’s too unwieldy a process reversing these charges, customers will revolt. I’ve had nothing but positive experiences with my virtual PayPal Mastercard to date and I’ve used it a bunch. I don’t have any problem using the card at various websites, have not been victimized or scammed yet, and I earn 1% cashback (pictured) every time I use it. Will using this new PayPal Secure Card pay me 1% cash back? What are the benefits to me using the PayPal Secure Card instead?

Just as with the Amazon Kindle e-Reader in the last post, I have more questions than answers. Guess we’ll both learn more in the coming days.

Some bad news for startups looking for VC financing and latching onto the uber trendy Web 2.0 label.

A partner at a leading Sillicon Valley firm has stopped investing in Web 2.0 startups, says Randy Komisar a partner with Kleiner Perkins:

He said he had recently told John Battelle, one of the organizers of the rapidly growing Web 2.0 Summit conference, that the term no longer had the same positive cachet it once had. In the VC community it clearly has a negative one.

It’s good to hear at least some VCs are burned out on gimmicks masquerading as businesses. I’ve not been a fan of the term Web 2.0, deriding it as web pooh point oh from the beginning. Startups who can’t be bothered to find a real business model for their projects and instead latch onto the latest, greatest trends don’t deserve financing.

I’m not saying that all startups that are being labeled as web 2.0 don’t deserve financing, so please don’t anybody put words in my mouth. I’m all for small businesses being able to grow and thrive in this country and beyond. Heck, I’ve been part of the small business culture since 1994. Only those who intentionally position and market themselves as web 2.0 and are dressing up ideas that were original years ago should be left empty-handed at the loan desk. “We’ll make money later” is not a realistic business plan.

This isn’t saying mashups aren’t fun. It’s all about perspective and realism, isn’t it? Most mashups are gimmicks, games and parlor tricks, not serious businesses. I’ve rolled a few mashups myself and am a huge gamer, so I’m there. More power to the mash generation! However, the whole notion that something as diverse as the web can be described with a version number is absurd. In case I’m wrong, I have the domain for web version 113 already reserved and running. Woot, 230 visits since November 16, 2006!

Onto web 3.0 now? Why not, I’ll iterate it right now: ++$version;

On Halloween 2007 the Google (disclaimer: I own GOOG stock) juggernaut has pushed past $700 for the first time ($703.93 as of this writing). Tomorrow they will be launching an OpenSocial API at http://code.google.com/apis/opensocial which they hope will provide developers the ability to create applications that will run on multiple social networks.

Except for Facebook and MySpace. Facebook employs their own markup language while Google will use Javascript and HTML, similar to what they did with Google gadgets. If you know Javascript and HTML, you’ll only need to learn what API calls to make. It’s a juicy proposal and one that has my mind clicking and whirring with the possibilities. Looking forward to tomorrow to see and start playing around with the OPenSocial API.

As for the stock price? When will Google slow down? I’m not going to even try to guess, but remain curious what others think. The movement from $600-$700 was fast. Yahoo (YHOO) and Apple (AAPL), two other stocks I own, are also doing well. Gotta love how Q4 has begun and hopefully will forget the misery of Q3.

Some thoughts on the $240 million investment deal in Facebook that Microsoft is reportedly making. They will get to load Facebook down with Adcenter ads or, perhaps, sell items via micropayment or — and this is probably the most obvious reason: blocking another web pooh point oh deal going to Google. This sentiment is shared by Piper Jaffray analyst Gene Munster.

How about sending virtual beer to your friends? You do know that this costs $real money$ on Facebook, right?

I’ll get back to virtual gifts in a moment.

Google still has the advantage, hence the score in the title (original title was changed before publishing), but this does give Microsoft a win. It puts them on the board. That’s an important difference in the cool crowds. If Facebook tanks, Microsoft can write off whatever they didn’t make back in an advertising deal. Google on the other hand could be locked out of one platform I’m sure they very much wanted to get into.

I’m speculating here, so please keep that in mind, but this also gives Microsoft a golden opportunity to spread their micropayment network. They could also build a new MMO version of the Xbox Live Dashboard to counter Sony HOME. Don’t laugh. I know Sony is in third place, but HOME + some good games could put the PS3 back on the map.

Some people enjoy buying virtual stuff via micropayments on Facebook (back to the virtual beer) and who has the network already setup to do that? Microsoft. Zune about to go social … thru Facebook? There are many, many possibilities here.

The good ship Google has sprung a few more leaks today.

Google has a well known company policy of “do no evil” — today their stock price momentarily struck $666.66. Had to get a screenshot of this historic moment. Satanic message? Financial coincidence?

Transformers on HD-DVD set a single day next generation DVD record selling 100,000 copies on the first day and selling another 90,000 the first week. Paramount reports that 20% of the purchasers connected to online content through the Transformers HD-DVD as I outlined doing myself a couple days ago.

Transformers which was an HD DVD exclusive didn’t beat the first week of the movie 300 which sold more than 250,000 copies (166,000 in Blu-Ray and 83,333 HD-DVD). And when compared to DVD of Transformers the numbers aren’t even close points out reghardware.co.uk:

The Transformers DVD sold 4.5m copies on its first day: almost 24 times as many as the number of HD DVDs sold.

Encouraging to see a positive sales response, especially the geek factor playing a part in the web-enhanced features. Hollywood should be spending more time and energy developing more web interactive movies. Gaming studios should be more involved. Maybe someday we’ll be able to play something like Dragon’s Lair in the movie theater, perhaps with alternate viewer screen glasses or HUD (Heads Up Display) like in Second Life. The theater experience could give us so more for the extra $dollars$.

Checking over Digital Leisure I see the HD DVD version of Dragon’s Lair is now available to match the Blu-Ray version. Both are $49.95. I’m going to wait for these prices to come down. Would like to see Dragon’s Lair II and Space Ace in HD too. Looks like they are on the way.