Warning Signs: Seven New Labels For Stocks That Might Cause Poverty
by Paul Springer
The U.S. Food and Drug Administration has minted a new series of health warnings to discourage cigarette smoking, a move that instigated a range of reactions spanning from hilarity to utter boredom.
While it may be ludicrous for the same government that allows for the sale of cigs to warn against their effects, there is definitely a place for graphic warnings in the world of investments.
OTC Markets led the first charge with its tier symbols, like the skull-and-crossbones for limited issuer disclosure.
A quick look around the investment community clearly indicates the need for graphic symbols to bolster the meaning of all the boilerplate warnings that no one pays attention to.
Here are some suggestions for new graphic warnings:
The dunce cap: This one goes on any investment scheme offering a supposedly “safe” return that is hundreds of basis points higher than anything legitimate, usually for some obscure asset like banana leaf futures or Russian sewer construction notes.
A picture of The Riddler in his question mark jumpsuit: This symbol needs to appear near the ticker for any leveraged exchange-traded fund with a structure that is so incomprehensibly baroque that the prospectus appears to be written in Ferengi – and reading it makes you want to take a huge position in Anheuser-Busch.
Sleeping homeless guy, cradling a 40-ounce like a baby: This should be stamped on Forex mini-account advertising that touts $250 minimum deposits and 200-to-1 leverage.
A pink, flying unicorn: This icon goes next to the half-dozen, China-based stocks that routinely jump up 10% to 20% every few days, seemingly defying gravity. Like the airborne unicorn, the stocks that go up all the time tend to exist mostly in the imagination.
Coffin: A symbol for labyrinthine and implausible pitches aimed at inveigling retirees to sell their safe assets and put the proceeds into age-inappropriate investments like currencies and commodities.
Light bulb inside a “universal no” symbol: For all the companies that have been using a bogus idea that has been “in development” for years to facilitate repeated stock offerings. Sure the personal commute catapult is a great idea, but it just never seems to get off the drawing board.
Joint with clouds of smoke: Put this one next to the stock symbol for companies whose only claim to fame is that they are planning on getting a piece of a multi-billion industry – usually one dominated by behemoths that will crush poorly capitalized entrants like a bug. These issuers and their buyers both need to self-medicate so they won’t feel the pain when the end comes.
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