Beware of Investing in Buzzwords RULES OF THE GAME
By David Futrelle

(MONEY Magazine) – This spring a well-known short-seller launched a campaign against what he claimed was a dastardly new kind of stock hype: Companies trying to make their stock prices bigger by falsely claiming to be involved in nanotechnology. That's the science of making things so small that they're measured in increments of one-billionth of a meter.

Is this just a tempest in the world's tiniest teapot? Well, no. Companies know there's nothing like a hot new buzzword to get the attention of investors in search of the next big thing. Researchers at Purdue University have found that companies that added a dotcom suffix to their names--this was in the late 1990s, when such a thing was a badge of honor--got a quick 74% bump in their stock prices. Heck, the stock of K-Tel International shot up tenfold after the schlock-music seller announced the launch of a website in 1998. The stock recently changed hands at 9¢ a share. --DAVID FUTRELLE