TheApril 24th edition of Business Week tells the stories of how some companies are now using press releases as a new tool to drive up the price of their stocks. Investors and news services alike are hungry for the latest news these days, tempting even mainstream companies to play fast and loose with the language they use in their "news" releases. These releases may exclude entire unprofitable subsidiaries, or leave out key information, in order to appear rosy to investors. Some biotech and net concerns are pumping out daily releases - creating questionable new divisions, mergers, and announcements of product enhancements that are designed simply to stay on the radar screens of online investors. A common ploy is to announce that a larger company will be using the press-releasing firm’s products or services, making it look like the small firm is marrying a titan like IBM. ZixIt Corp, an internet privacy and security company, announced in one release that "The Perot Group Adopts ZixMail for Secure Internet Communications." The stock soared, until it was discovered that only one executive at the Perot Group had registered for the ZixIt service. On top of that, investors had confused The Perot Group, which is a small investment firm owned by Ross Perot, with Perot Systems, the giant employee systems-integration company that he also owns, and that has 7000 employees.
There was also an example in the article of a tree-trimmer who put out "buy" recommendations from a phony Independent Financial Reports organization he made up, and posted them on Internet message boards. The press releases were also distributed by Business Wire, a paid Internet news service, and ended up on news services like Bloomberg. Investor web-sites such as Marketwatch.com and TheStreet.com also picked it up. These phony reports drove the price of one stock up to $22 a share before it fell to under a $1 a share after the scam was uncovered.
The information age is great, but abuses and scams are out there, and they are not going to go away anytime soon. Buyer beware!
Oops!
JP Morgan’s website was deactivated on June 13th, because it missed paying the $35 annual renewal fee for its jpmorgan.com domain name. Network Solutions says it reminded JP Morgan about the payment (due April 25th) on four separate occasions, without result. The fee did get paid, and the site was back online by the next day. Sometimes corporate foot-dragging on paying bills doesn’t work out too well.
The Importance of Financial Education for Corporate Employees
The National Institute for Personal Finance Employee Education (NIPFEE) is based out of Virginia Tech in Blacksburg, Virginia. According to their research the current problem is that "Many of today’s 110 million workers have trouble managing their money and are not saving for retirement. One result is that nearly 50 million workers have yet to begin saving and investing through an employer-sponsored retirement plan. A second result is that of those who are saving for retirement, fully half have an investment portfolio of $15,000 or less." For more information on this important topic, and to see NIPFEE’s solution, which is comprehensive workplace financial education, visit their website at www.chre.vt.edu/pfee/
.Book Review of the Month - The Seven Stages of Money Maturity by George Kinder
This is a wonderful and thoughtful book that explores the spiritual and psychological issues of being around money. Mr. Kinder points out that questions surrounding money always involve the spirit, and that we must explore money and spirit together in order to attain true security and peace in our financial lives. Quoting Mr. Kinder: "Most financial advisors and books about money approach finance as if it were simply a skill to learn, the same sort of thing as hitting a fastball or speaking French like a diplomat. Money Maturity does include skills, such as understanding investment options and using a budget effectively, but it goes much deeper - to the feelings, the heart, and, yes, the soul. Money Maturity helps resolve the troubling emotional conflicts around money that never seem to go away. For many of us money represents anything but peace."
There are numerous stories and real life examples found throughout this book, meaning you will probably run across situations that you can relate to and learn from. If you are not sure this is the kind of book for you, read just the first chapter, and I think you will be hooked!
"We are always getting ready to live, but never living." Ralph Waldo Emerson