Pump and Dump

Pump and dump or “hype and dump” is something you need to be aware of when you are in the stock market. And here’s why.

Pump and dump or “hype and dump” is something you need to be aware of when you are in the stock market. And here’s why.

When scam artists want to make money in the stock market here is what they do. They buy a number of shares of a stock, normally a penny stock and hype it up.

They do this through email newsletters, phone calls, or any way they can reach a large amount of people. All these people buy the stock and that forces it to go up. Then the scam artist exits the trade at the overinflated, leaving everyone who bought it to ride the penny stock all the way down as it crashes.

Of course doing this is extremely illegal and there are consequences for doing this type of stuff. But people still do it and a lot of big names get away with manipulating the price and taking advantage of small ignorant investors.

That is why it is better to look into something yourself and to not take anyone’s word on something until you have confirmed it yourself.

So, now that you know how a pump and dump scam works how do you avoid it? Simple, Don’t Buy Any Hot Tips, especially from people you don’t know. Buying “hot tips” normally doesn’t work even if the tip comes from someone that means well.

It is best to do your own research when selecting a stock, and make decisions based on facts that you know are true.

Jim Crammer

A lot of big names that people trust will often try to manipulate the market by spreading rumors. This is a video done by Jim Crammer on how he has used his influence in the market to manipulate prices and turn a profit.