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“Red Hot” tips can burn you

Think you’ll get your money back for suspect stock picks? Don’t count on it.

“I’m going to shout it from the rooftops to get the word out,” boasts share tipster Frank Black. “This is NO misprint! I’ll repeat my offer to you: Unless you double your money in three months on at least one of my share tips, everything you’ve received is FREE. That’s right, FREE!”


Really? Not according to one of Moneyweb’s community members, who subscribed to Black’s “Red Hot Penny Shares” (RHPS), a newsletter distributed by Fleet Street Publications.


Our community member subscribed to RHPS around April this year. He followed its advice, and purchased shares in Cellcom (JSE: CEL) and Onelogix (JSE:OLG).


Far from doubling, the share prices of these two stocks have actually been in a state of decline since Black tipped them.


In fact not one of the five shares identified by Black as winners doubled in the three months. Their prices all fell or stagnated, in sympathy with the rest of the market. Our community member thus asked for his subscription fees back.


Instead of receiving a refund, as Black so boldly promised he would, our community member received a curt email stating that his claim was out of a so-called guarantee period.


An insincere guarantee


It turns out that subscribers have only three months in which to voice their dissatisfaction with RHPS, if they are to expect a refund. This condition is contained in print much smaller than that used for Black’s promise above.


RHPS’s promise is thus hypocritical. If at least one of its stock picks doesn’t double in three months, you’ll get your money back. But you can’t get your money back if you wait more than three months. And you have to wait at least three months to know for sure that the picks haven’t doubled.


That is the equivalent of a hospital telling a pregnant woman that she’ll get a free delivery, provided she has her baby after ten months.


After Moneyweb approached Fleet Street Publications’ Annabel Koffman, she offered our community member only one month’s subscription back. Unhappy with this offer, he says he will seek financial redress through the ombudsman for financial services providers.


Koffman says that RHPS has been in existence since 2001 and has 1000 “very happy customers. One of the things we pride ourselves on is delivering on our money back guarantee which we offer with virtually every publication that we produce.”


Hot air or hot stocks? 


RHPS’s puff material, which runs to 16 pages, is full of “hypothetical” examples of how you could have earned huge amounts of money by trading on Black’s tips. It is long on success stories, and mysteriously short on failures (RHPS once infamously tipped Milkworx at more than ten times its current trading price!).


Yes, RHPS subscribers have made money on its tips, especially in the past few years.


But it is dubious logic to attribute these returns to Black. Virtually every penny stock on the JSE has done well in recent history. You could have selected penny stocks by throwing darts at the share-price pages three years ago and have many successes to boast about today.


There is not a shred of evidence that Black has been able to outperform the JSE’s Small Cap Index over an extended period of time. Nor is he able to avoid really catastrophic investments (think Milkworx).

And if Black really is as good as he claims, why is he selling his tips for the paltry sum of R970? In fact why is he selling them at all?

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Don’t worry.

if you lose money there you can always go to the South African Inaugural Value Investor Conference hosted by Internationally renowned ROBERT P MILES advertised directly above this article.

Mr MILES is a Warren Buffet expert and is so damn good that he even uses Mr Buffet’s name in his e-mail address.

May I ask whether Mr Buffet has sanctioned this snake oil salesman to use his name?

Come on MONEYWEB, show just a little bit of spine in the advertisers you allow on your site.

This is disgraceful

All is not lost.

If you lost money on hot tips you can always go to the S.A. Inaugural Value Investor Conference hosted by the Internationally renowned Warren buffet expert mr ROBERT P MILES.

His advertisement appears directly above this article.

what is a warren Buffet expert may I ask? and does Mr Buffet acknolwledge this poseur as such?

Why is it that my nostrils are flaring in the way they do when there is snake oil in the air?

Come on Moneyweb, this is disgraceful.

Mr Hogg, show some spine and kick the imposter off your site

I wondered what had happened to old Cheetah. Seems like he should be renamed “Cheater”. The guy used to be a follower of Jack Milne. I am sure some of his tips did double, but many have lost money. Basically he’s one of those guys who is deluded by his own ability. A technical analyst, well he looks at charts. But when it comes to the hard work of research and financial analysis, he does not have a clue.

Look where it is today – it’s a sham!

this calibre trash is tantamount to spam on the internet

I subscribe to Franks newletter of late – while I have not yet invested in any shares listed, I use it for information for potential investments – but of course with a good dose of my own common sense added to the equation. So yes, there will be shares that fall spectacularly. If you cannot accept this fact, dont bother with shares.!

But Frank does supply a spreadsheet with records all of his picks and the record of returns since he started the service.SO – If anyone can concretely (I really mean concretely across all the shares, not just one or two that went bad) prove that what Frank picks is total rubbish, I challenge them to do so – but using facts from all across the entire range of his selections over a few years.

Then if this can be conceretely proven that ALL is rubbish, I will also ask for my money back too.

And of course any advertising is based upon the spectucular cases and hypothetical spinning of money from one success to another, We know all that is not real life.

Ever seen a fat, ugly, 50 year old lady in a face cream ad ?

Can you really buy a Nissan Murano for R 3875 per month without doing it over 120 years with 50% residual and plenty of small print ? Grow up chaps.

PS – Hey, I should be a journalist !!

This simply amounts to biased hate speach. I cant believe that a reputable news website would choose to publish this. People who blindly invest in the stock market without thought or experience are sure to lose money. There is no fool proof method to investing. Mr. Black merely provides share tips, not guarantees. Ignorant investors are sure to get burned no matter who they listen to.

Well there I was… munching on a lunchtime sarmie… reading this fine example of brilliant journalism (tongue out of my cheek now – your two cents worth is interesting) and WHAT do I see in your last paragraph???

Ageist propoganda. I am disappointed.

Are you defending Mr Black as credible when his share promise in Black and White is that your shares will double or your money back. Dont you think that is irresponsible, especially from a seasoned investor. Is this not borderline dishonesty and should he not know better. MoneyWeb are simply putting it as it is … no bias. On another note Mr Black has shown that he does not do proper fundemental research on his recommendations… AGI is one such share recommended in June this year. The directors have been selling their shares for some time now and if he had done little more than called the company to assess if there were any issues he would have been aware of the equipment installation issues they have experienced for months now, to be precise before June this year. I dont say he is criminal but their marketing methods are much to be desired especially when the market is booming and small inexperienced investors are flocking to the JSE.

Moneyweb has zero influence over what adverts are placed in their web-adverts space box as this is controlled by Google themselves… i.e. Google push adverts which Google sell to their customers onto the various websites (such as Moneyweb) who subscribe to the Google advertising program. The content that Google pushes will depend on the type of website it is ie in Moneyweb’s case it is a financial investments website so related ad content is pushed there for readers like you and I to see. So guys please get off your high horses and yes…PS I subscribe to Red Hot Penny Shares …. That does not make Moneyweb wrong it highlighting what they think inappropriate marketing techniques. Credit where credit is due. TTrader

Advertising brings in money to the site. If Moneyweb only allowed certain advertisers, the site would not be able to survive without charging for access.

Moneyweb is not there to tell you who to trust and who not to trusts. You have to make up your own mind. All they can do is give you access to as much information as they can… you have to choose what to use!

Don’t be so darfed 🙂

I also subscribe and use Franks tips in the same manner. But you and I have knowledge of the markets, can do trend analysis, know how to use moving ave’s etc. The people they are marketing to are told dont worry you just follow my recommendations and all will be well. Well AGI (yes granted is a one bad apple only) was a disaster that erroded value of 33%+ all because a bit of fundemental homework was not done. That to me, if I was retired and put in part of my savings, this would seriously scare me. There are no gaurentees but 33% because of no homework is a bit too high risk, even for me. There is such a thing as MARKETING BANTER but I feel they have gone overboard and are attracting the uninitiated into a market which is risky and where they provide ‘confidence’ ito buying penny stocks where no such ‘confidence’ exists or is researched. I would like to hear from Frank vis-a-vis his research done on AGI.. that would be interesting.

I reckon Mr. Cobbet is just sour that he’s not recognized for all his amazing insights into markets.

Well, I for one have learnt more from Frank Black’s advice and way of thinking than from any other ‘expert’. I’m sure i wouldn’t have made so much money at the age of 23 without his advice. I’ve been a subscriber for 2 years now.

… I am not daft.

And I understand your point and actually agree with the underlying dynamics.

However, when Alec Hogg goes all soppy about long term investment and the dangers of short term trading and when his colleaugues go all moralistic in articles then I am tempted to remind him of his own boiler -room past and to suggest there might just be a tiny bit of irony in linking the article by his colleague to the quite obviously snake-oil loaded advertisement parading right next to the article.

Firstly, I do not write the promotional material with garantees etc.

Secondly, the portfolio of shares that I run speaks for itself. It contains uslally about 40 shares (all small caps), they are held for about a year or so, so if someone buys in at the top long after recommendation it will not have the same performance as those who got in nearer selection date. By the way Onelogix (mentioned here as a loser) is actually up 97% since selection a year ago. One section of the portfolio contains five shares held for the mid to longer term and none are near to selling date.

The performance of the portfolio is as follows:

3 year performance: average gain of 67%. Last year: close to 100% First six months, closed positions 167%. Individuals: 2 shares over 1000% although one has now pulled back to 630% profit since selection.

Its impossible to run a fairly large portfolio without a few losers and focusing only on those is short sighted.

We do not have 1000 subscribers, but close to 20,000.

I wish you all well!

Frank

RHPS has helped me make a lot of money on the stock market even though a few shares have gone south.

What has Moneyweb done for me ? zilch, zero, nothing. Thanks Frank Black, I will continue subscribing to your service.

If someone was making money would they share their secrets with you.

I have been subscribed for two years no regrets. Someone is sharing his secrets, thanks Again.

The best stock pickers never advertise as they are rich enough to manage their own money. If you are so unbelievable why do you tell the world? I note in your reply that you never bothered to anwer that part of Julius’ article!

Sure you would never share your market strategies etc if you are a slefish self centred pig. One of the things that always endeared me to Warren Buffet is that he always shares his strategies. I happen to love seeing others beneift

Thank you for instructing me what to do. Since you are so wise, I am surprised you don’t know the answer already! Neither I no the staff trade in our portfolio constituents for the obvious reasons. However I do trade in single stock futures and other instruments from time to time…but that is none of your business!

Frank

As said to Marlin below…only the selfish don’t share. It motivates me! And again as said in my first piece on the portfolio performance I do not write the promotional material. I would never say that I am so unbelievable…never! What I will say is that my porfolio, over time has done extremely well with a few exception. Funny thing this…the only problems we have is from non-subscribers who presume all sorts of things!

Have a good day

I see that Mr Frank Black does indeed get very personal. First i am not in the same league as Warren Buffet or now way near.

I am a novice as a trader. Please try to argue you point and not call me names.

Thank you for contributing to this debate. You say that you do not write the promotional material, but do you at least review it before it is published?

Do you agree that “your” guarantee is insincere? And do you think it’s responsible to suggest that at least one of your stock tips will double in three months?

If you are not the author of the material, then who is? Are they using your name with your permission?

Do you think that your newsletter constitutes financial advice, as defined by the Fais Act?

Fundamental research is almost negated and of not much quality with this lot of “volatility poppers”….you almost have to trade them, so in that instance go talk to Clive and he can maybe help with all the required input

Hi Julius The promo material is written by a staff compliment dealing with this, based on the London model. Personally, I don’t like self promotion at all…but that is what works well. I do the research and writing of each edition and managing the portfolio, which has been very successful on average. It has come off in recent months with the whole market, but is still in good shape. I feel terrible when any share causes anyone to loose anything…but that is this game. As said, the portfolio average has done very well indeed. I think the guarantee story will have to be revised due to exactly this.

In terms of “financial advice, that is a broad subject and because we have such a large subscriber base, I need to keep things as simple as possible in the publication. If you look back at the portfolio and what was closed (obviously I can’t disclose what is in the portfolio now…that would be unfair to subs) you will see from Afdawn’s 1100% to dozens in the 200% range, and one now at 630% plus the great majority closed in the 50 to 100% profit range. You tell me is that okay or not. If its such a problem, why has our subscriber base being growing at such a rate?

Anyway…its best to view these things in the one year or more time frame as I suggest and not in the short-term. But yes there will be failures…just the way it goes. I am deeply sorry for any losses that you may have had and I really do wish you well. Ultimately we are in the same game!

regards Frank

No I did not call you names…that was a very general remark. If you read it that way…I am sorry Just have a look at this forum though , I feel cornered by all this hostility!

I did not realize that you were a novice in the game also…as such, the market really is a great world and I hope you do very well for a long time. It would be nice if we could all get on even with differing views and approaches.

Regards Frank

Show me the gangster that is using dirty tricks to force all you poor people to subscribe to Franks service ? Bring him to me, that dirty son of a gun, shame on him – forcing you to part with your money for such things. Give me his address, I will go and bliksem him personally.

Of course a joke – if you don’t like Franks service, dont subscribe, it’s easy.

Just like all the other thousands of decisions you make every month.

They are yours to take responsibility for.

Not so long ago, I read a fairy tale on this forum about a crook called Jack Milne. Nobody knew where there hard earned cash was being invested. Is this a repeat story with new crooks?

Seems like Frank feels more generous now… he has launched another tipping letter… WOW.. if only everyone would share their “wealth” like this!

He also called WEZ on 200 , SAN 170, BSR 600, SIM 200 ish , ATR 150 , Why not have a couple of these –

Wolf in sheeps clothing! With Grey beard and alll … LOL LOL

A newcomer on stosks trade and jse,have made money on Uraniumone Miranda and caol,THANKS to Frank .would appreciate more tip from commentetors .

If you can’t make your own decisions regarding stocks, then don’t cry if you get Frank’s newsletter and it doesn’t always work. NO ONE can predict the market as we all know. So use your brain, or get help, but know that there are no guarantees in this game, and anyone that tries to tell you that there are is delusional.

I think is time for Frank Black to take some tips from professional chartist such as Dr Clive Roffey, Marc Reed, Colin Abrahams, Frans Burger and others. The charts were warning us already in December 2007 that the market is heavily oversold but in Mr Black’s case he just carried on putting people in the market to be slaughtered. In my book if Mr Black was employed by me he would long since have been shown the exit door . It is disgusting to say the least. Yes the market always comes back if you are holding the right stock but what Mr Black is not telling subscribes is that it can take months years and sometimes many years by which time some of his subscribers may be in the grave and the companies that Mr Black have been tipped no longer in business.

End of comments.

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