Quick rich schemes are like an old all too familiar yet classic cliché; you blow the dust off of them, apply a fresh coat of polish and they once again are made to look and sound too good to be true. These high polished opportunities are designed for one purpose and one purpose only; to separate you from your money.
This past weekend I received one of these familiar old schemes via the US Mail. It came in the form of a multi-page high gloss 8×10 brochure from Tobin Smith NBT Equities Research. In this virtual Internet enabled world of today, this in and of itself was an interesting form of delivery. And yet appropriate. For it put into people’s hands a physical and substantial “thing” that a person could hold and imaging a certain “value” or quality to it. It even had a price tag on it of $8.95 but for some reason they sent it to me for free!
The brochure started out with an attention getting image of a blender and lots of money flying around along with the title “McDonald’s Secret Money Making Machine”. Again, Quality and Value; McDonald’s is a name brand that everyone can identify with.
So what is this new money making machine that McDonald’s has that was so great?
Smoothies are very popular menu items at McDonald’s and other restaurants. And if major food chains are selling them and increasing their real-time current profits with smoothies, then of course it stands to reason that a small startup supplier of smoothies and smoothie machines would be “the next big thing” to invest in.
So if McDonald’s was doing this, it had to be good! Right?
If other major restaurant brands were selling smoothies and making big profits, then that had to be even better! Right?
The brochure seemed to identify a startup company called Barfresh Foods (BRFH). As I flipped through the pages, I saw lots of big numbers regarding potential market share, customers, revenue, return on investments etc etc.
The appropriate word here is “potential”. In over SEVENTEEN! Pages of shinny polished advertising was there not one real fact regarding current profit numbers, earnings, or return on investments.
Just that BRFH was in its infant stages of market penetration and had a couple retail deals in Australia.
And please note that potential market penetration and share is only hypothetical. So all this quality advertising was, unlike the real brochure, not real.
IMHO you would be better off investing in the brand names selling smoothies than in this company.
But, for the sake of this blog, I will look at BRFH as a potential investment.
First, it helps that I am in a fairly rural area, so the mailings such as these often get to me a day or two later than other people.
Looking at the recent 5 day chart for BRFH, one can easily see that there has been quite a bit of buying activity lately. In fact the price of the stock has increased substantially. Friday alone had over a 12% gain and Monday yet another double digit gain.
So what happened Tuesday?
The day or two after most people would have invested and a price run up of nearly 80% in the past week?
Yup, the beginning of the end. That drop represented over a 10% sell off. At one point the stock was down over 18%. Effectively erasing any profit get rich dreamers may have had.
Yet, I bet good ol’ Mr. Smith is smiling all the way to the bank.
Sorry to say, this appears to be one of those classic pump and dump schemes that only the scammer and occasional day trader profits from; not the average investor who gets suckered into yet another get rich cliché.
This stock may yet prove me wrong and go back up, and I will follow the price movements out of curiosity, but I doubt that this stock tip has much substance to it at all.
At least the brochure looked nice
Until next time . . .
Be Good, Do Well, Have Fun