(Petit interlude until the next post which proves harder to write than expected)
early January, you receive an anonymous letter which predicts that the stock will rise this month. The information is correct, but you're not careful. In early February, you receive a second letter that tells you this time prices will fall. You do not always lend attention, but the information is again fair. In early March, a third letter is again a correct prognosis and so on each month. You end up being intrigued by the vision of this mysterious correspondent.
In July you will receive a letter this time offers to invest in special funds offshore. Put in trust by his brilliant intuition in the previous six months, you entrust much of your savings ... and do you ever revisit the color. You then go cry on the shoulder of your neighbor, who remembers when you have received also received two such mysterious letters earlier this year. Except that for him the first prediction was right but not the second and then stopped shipments. What has happened?
Here's how the impostor was done. In December he was first drawn at random 32 000 names in the directory. At half the population it has sent a letter predicting the bull market and the other half another letter predicting the opposite. At the end of the month, he has kept a list of 16,000 people who received the correct prediction and resumed before the same: the first 8000 he sent a bullish prediction and other predictions for the 8000 round.
And so every month until July when he he remained a selection of 500 people who received six consecutive correct predictions, so ripe to be tempted by its attractive investment proposition.
With a few thousand dollars invested in stamps (or email, it's cheaper) the scam has made millions in fake ...
Sources:
This idea comes from the book by Nassim Nicholas Taleb, Chance Wild (2005)
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