““The Mysterious Letter You get an anonymous letter on January 2nd informing you that the market will go up during the month. It proves to be true, but you disregard it owing to the well known January effect (stocks have gone up historically during January). Then you receive another one on Feb 1st telling you that the market will go down. Again, it proves to be true. Then you get another letter on March 1st –same story. By July you are intrigued by the prescience of the anonymous person until you are asked to invest in a special offshore fund. You pour all your savings into it. Two months later, your money is gone. You go spill your tears on your neighbor's shoulder and he tells you that he remembers that he received two such mysterious letters. But the mailings stopped at the second letter. He recalls that the first one was correct in its prediction, the other incorrect. What happened? The trick is as follows. The con operator pulls 10,000 names out of a phone book. He mails a bullish letter to one half of the sample, and a bearish one to the other half. The following month he selects the names of the persons to whom he mailed the letter whose prediction turned out to be right, that is, 5000 names. The next month he does the same with the remaining 2500 names, until the list narrows down to 500 people. Of these there will be 200 victims. An investment in a few thousand dollars worth of postage stamps will turn into several million.””
