What is Pump and Dump?
Tuesday March 27, 2007
Ever received one of those emails that pretends to be TO someone else, passing on some hot stock tip they've learned? Referred to as 'pump and dump' scams, the intent of the email is to get lots of people to take advantage of this unexpected windfall of information and buy the stock. This inflates the price, at which time the scammers sell their shares for a hefty profit. It works like this:
- Scammers buy worthless stock at a very low price
- Fake email is sent to millions of people, claiming the stock is projected to move
- People buy into the scam, and thus buy the stock, thereby raising the price
- The scammers sell off their holdings for a hefty profit
- The victims are left holding worthless stock
Remember, if it sounds to good to be true, it is too good to be true. Respect your hard-earned money and avoid acting on stock 'tips' received via email.
Hahaha! I’m a breastfeeding mom, so my idea of what “pump and dump” means is entirely different.
Pump and Dump is a pain in the “rear end”. I have had to only accept Email from address book names. My mac server sorts most email spam and I don’t put my address about much but it is a nuisance that I have to access my mac account to see what’s about.
Mary,
Many thanks for this information. I have wondered why I, living in Sweden, get so much advice to buy this or that American stock. I wondered, if this opportunity is to golden as they say, why do they spread the information instead of quietly buying the stock themselves? But I did not think long enough to see your simple answer. So thanks again!
Nils, in Sweden
It’s amazing how human nature never seems to change. I’m sure that almost all people think the whole trick is suspicious. How can they walk willingly into the trap. I’ve developed a reflex reaction–whenever I see a “great offer” of one sort or another on the internet, I immediately erase it. They aren’t even worth the time it takes to finish reading them.
I am being inundated with Spam with a dark background in the message and always a new sender and new subject line. Mozilla seems to be learning to keep it out, mostly. Only about 20 in the last 3 days. What a nuisance!