I send Jeff Grossman an e-mail to to following effect, and here is his reply.
>Jeff, Elsewhere on the 'net someone accussed you of being paid for your
>recommendations by the companies you recommed. Do you take "payola"?
Hi David. Was this accusation in a public place where I can respond, or
was
it in private e-mail? The answer to your question is that The SmallCap
Investor does not recommend stocks and I am not compensated for
recommending any stocks. HOWEVER, the some of the writers of the
research
reports that appear on my site ARE compensated by the company, and this
is
usually disclosed at the end of their research reports. In addition, I
AM
paid for the advertising that appears on my site, which is currently for
a
"research" report on Inside Wall Street's web site. It is just an ad
that I
run. I don't recommend the stock. If you read my beginner's guide to
microcap investing, I have more thoughts on research reports. To save
you
the trouble of going to my site, here it is:
"About research reports: Investors should realize that the majority of
microcap/smallcap research reports that they will come across are paid
research reports. This means that THE COMPANY PAID A FEE to the writer
of
report. (Sometimes the writer of the report has been hired as the
company's
investor relations firm.) The report writer might get cash, stock, stock
purchase warrants, or a combination of all three. This does not mean
that
the research reports are not useful. It does mean that the reports may
be
biased and that many of the negatives have been left out of the report.
This is why you always need to do your own research rather than just
relying on a research report. The reports most likely contain a lot of
useful positive information. It's your job to find the negatives.
How do you know which reports are paid for by the company? Read
the
disclaimer at the end of the report. The disclaimer will often reveal if
the writer of the report was compensated for writing it, or if the
report
writer has been hired as the company's investor relations firm.
Where do you find unbiased, unpaid research reports?
Unfortunately,
most research reports like that are not free. You will often have to pay
for the report or subscribe to a newsletter. BEWARE: Occasionally, even
the
research you have to pay for is also paid for by the companies that are
being written about. This means the report writer is being paid by both
the
company and the people reading the report! Remember to look for
disclaimers! Free, unbiased research is available, but you have to look
hard to find it. And then you have to think about why the person is
giving
away free research. How are they making their money? Perhaps they own
the
stock and want other people to discover it in order to move the price
up.
If the report is full of hype and doesn't mention the negatives, watch
out!
Look for research reports that give you both the positives and
negatives.
There's nothing wrong with the report writer owning shares in the
company
he recommends as long as the writer truly believes in the company and
discloses the fact that he/she owns the stock."
>I know you don't give these recommendations because you think the general
>public is wonderful and they deserve it, so tell me your motivation;
>that is, how do you make your money on the efforts of what you do on the
>internet?
At the moment, all the money comes from advertising. In the future I may
charge companies for giving them exposure on the site, but I would not
be
recommending purchasing the stock.
Besides the small amount of money I make from the web site, there is
another reason I run the site. I actually like to help people.
Sincerely,
Jeff Grossman
The SmallCap Investor
financialweb.com |
