Is this a Stock Scam? It Looks like One
I get tons of these e-mails because my e-mail address is on the Stocks site I write and edit at About.com.
Maybe you get them too. If so, I hope you delete them as quickly as possible. Here's the text from three different e-mails that arrived on Monday:
In the world of scams, this is known as "pump and dump." The idea is to trick people into thinking they can get in on the ground floor of a stock that is about to take off.
If they are successful, the stock's price will rise as suckers rush to buy shares. After the stock has risen as far as the crooks can push it, they dump the shares they have been holding on to, which were bought at a much lower price.
The effect of dumping a large number of shares is the price usually drops dramatically.
In this case, the stock was trading at $0.58 per share on Monday. It ended the week at $0.40. It closed even lower the next week at $0.32. (Most of the time, these scams target "penny stocks," which are issues selling off the major exchanges usually for less than $1 per share.)
Did the scam work? It's hard to tell. Between July 15 and July 28, some 250,000 shares were traded at prices ranging from $0.51 to $0.60.
From July 28 to Aug. 1, 187,000 shares traded and the price dropped by almost 33 percent.
You can read more about these scams in Avoiding Pump and Dump Stock Scams.
The pump and dump scam (and all the others) are aimed right at your greedy spot. When you start listening to that "get rich quick" voice, you are hooked.
Greed, along with fear of losses, is one of the most destructive emotions for any investor.
To paraphrase an old marketing slogan: Make money the old fashion way: earn it.
Maybe you get them too. If so, I hope you delete them as quickly as possible. Here's the text from three different e-mails that arrived on Monday:
- the s.tock XXXX ready to grow giving tripl.e digit gians. This one is?moving hard today and investors are raking it in. There is a time for?all things, and this one is now. Get on XXXX
- The savvy investr has _to watch XXXXX. This is the day traders deram, and?it looks like it will only be getting sweeter over the next few days.?Last time we saw new,s from XXXX it rocketed.
- the stock XXXX ready to grow giving triple digit gai -ns. We see this as?jus t the beginning. Once these results hit the street, it could explode?tomorrow. Get aggressive, it could really pay off tomorrow on XXXX.
Company Part of Stock Scam?
I edited out the company's name - I don't know if the company was involved in this scam or not. Many times companies have no idea this stuff is going on.In the world of scams, this is known as "pump and dump." The idea is to trick people into thinking they can get in on the ground floor of a stock that is about to take off.
If they are successful, the stock's price will rise as suckers rush to buy shares. After the stock has risen as far as the crooks can push it, they dump the shares they have been holding on to, which were bought at a much lower price.
The effect of dumping a large number of shares is the price usually drops dramatically.
Did Stock Scam Work?
Sometimes it works and sometimes it doesn't.In this case, the stock was trading at $0.58 per share on Monday. It ended the week at $0.40. It closed even lower the next week at $0.32. (Most of the time, these scams target "penny stocks," which are issues selling off the major exchanges usually for less than $1 per share.)
Did the scam work? It's hard to tell. Between July 15 and July 28, some 250,000 shares were traded at prices ranging from $0.51 to $0.60.
From July 28 to Aug. 1, 187,000 shares traded and the price dropped by almost 33 percent.
You can read more about these scams in Avoiding Pump and Dump Stock Scams.
The pump and dump scam (and all the others) are aimed right at your greedy spot. When you start listening to that "get rich quick" voice, you are hooked.
Greed, along with fear of losses, is one of the most destructive emotions for any investor.
To paraphrase an old marketing slogan: Make money the old fashion way: earn it.
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