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The Perfect Predictions Scam

It would be surprising if you were to be a victim of this scam in the future, but knowing how it works is important.

From the point of view of the person being scammed, you get a message that says somebody can predict price changes of stocks and that they do it for a fee, but you are getting a free sample; this letter/eMail/SMS includes a ticker symbol and an up or down prediction for this week. You discover that the prediction was correct. A week later you get another similar message, the ticker symbol might be different but it will have a prediction. Again you will discover that the prediction was right! Amazing? This pattern will go on for many weeks and you will be convinced that paying for the service will grant you access to this insiders club where you can make a fortune and fix all the problems in your life.

The way it works, in reality, is the scammer sends out a million messages, but half say the stock ticker will go up and the other half say it will go down. Some buy after the first week; they are done. Some got the wrong prediction so they get no more messages. On week two about 500,000 people get messages where 250,000 are told it will go up and the rest that it will go down. Of the 250,000 that got two correct predictions in a row some will buy the service and they are out. Another 250,000 never get the message again. The scammer runs this trick until the halfling runs out, but along the way, lots of people got perfect predictions not knowing that there was another much bigger group getting non-perfect predictions.

The length of the string of perfect predictions feels like the scammer is really good, but it's just the random chance that the scammed person was sent the correct prediction over and over again.
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