Private Investor: If the boiler room calls, boil 'em right back

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The Independent Online

If, like me, you still have the odd share held in paper form (and I agree with my fellow writer Derek Pain that that is just about the only true way of properly "owning" a share), you may well find yourself the recipient of various bits of mail and phone calls from organisations trying to get their hands on your money.

I can honestly say that, in the decade and a half during which I've been approached to take part in unbeatable, unrepeatable special offers, I have not taken advantage of a single one, and have never had cause to regret it. Indeed, in the process, I have become something of a connoisseur of their methods.

The most familiar are the organisations that purport to be brokers of some sort, even if they are not. They will have a suitably impressive-sounding title that usually borrows its name from one of the bigger players in the industry. Some permutation of "City", "Capital", "Lombard", "Securities", "Continental", "First", etc, is usually involved. Failing that, they'll give themselves some posh-sounding, double-barrelled name, like something out of a class-based TV sitcom: "Fforbes-Hamilton Securities" or "Fletcher-Dervish Investments" or some such. Always, they opt for an address that sounds like it's in the City, but isn't.

My usual procedure with these is to send back the reply-paid envelope empty. It at least helps keep the Post Office in business. But it's just not very interactive, that. Far better are the phone conversations.

I know that the "boiler room" phenomenon has cost investors millions of pounds, and I actually have a lot of sympathy for folk who have lost money in this way. Only the other week, we heard some harrowing stories about such a scam, run by a father-and-daughter team in Florida. Paul Gunter and his 25-year-old daughter Zibiah Joy duped around 15,000 of us into investing more than £35m in worthless shares. They were, unusually, caught, and have been sentenced to a long term in jail, but I don't think much of the money ever came back.

The problem is that these types become expert at exploiting people's politeness and their inability to just put the phone down. Confidence tricksters have some fairly sophisticated strategies, so you have to be careful – but you can still have some fun at their expense. When they call on a landline (not a mobile phone, where I might need to pay for the call), I like to string them along, and keep them talking for as long as possible. Every false claim I hear is challenged, and challenged again. Every bogus company they try to push is answered with an unequivocal "never heard of 'em, sounds like rubbish". It's actually enjoyable to have them sweat and squirm, and wasting their time is the least I can do.

Sometimes they even claim to be calling on behalf of the company, who are making a rights issue available especially to you, or have a tranche of shares they want to be shot of – again, especially for you.

The old saw that if an offer sounds too good to be true then it probably isn't true is an excellent one to go by in such circumstances. Keep 'em talking, but never agree to anything, and never send 'em any money. Or just put the phone down. You'll feel better for it.

As for more legitimate shares, there are plenty of bargains to be had right now. I still wouldn't plump for the banks, though. It is difficult to believe that the sector could have got itself into quite such a pickle, but there is no reason why things shouldn't get worse before they get better.

It's a bit unscientific, but if we assume that the British economy will roughly follow the path of the American one, with a lag of 18 months to two years, then we are in for some very rough times indeed.

The best bets out there are probably in the bombed-out property and building sectors, where the panic is, understandably, greatest. Our nation may even now not realise how bad things could turn out to be. Not perhaps as grim as the early 1990s, but distinctly slow nonetheless. It won't, though, last forever.

When I get the cash, I'll carry on building up my stakes in the posh estate agents/investment management firm Savills and the online estate agency site Rightmove. They will do well when the good times return, as they surely will.

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