“The Pump and the Stock Dump” – Never Throw Money Again!

We have all received them in the mail. They come as stylish, colorful, bright, detailed reports on a downstairs investment, still trading for pennies on the next big tech. They have insider names like “Wall Street Insider” or “The Underground Stock Report.” They often link the promoted actions with legitimate companies or common sense needs around the world. The problem is, while it always sounds promising, you are being gently stroked and tranced to engage in what is known as “pump and dump.”

The anatomy of the scam involves these micro-businesses that typically trade on the Over-the-Counter Bulletin Board (OTCBB). They are also known as “Pink Sheets”. The OTCBB is not part of the NASDAQ Exchange and typically involves extremely small start-ups with questionable stability. They typically pay a “stock promoter” a large sum of money and are often part of the scam themselves. Large blocks of stock are accumulating and the mail is shutting down. The trap is now set when unwitting investors start to see stocks move lower and try to catch the wave. As investors pile up and drive up the price of stocks, owners and stocks push the whole sale, “The Dump,” and leave you with the bag.

They will often take you to the Internet bulletin boards with carefully controlled messages as you wait patiently for the next big “thing” to rise from the ashes of a few pennies or micro pennies to 50 cents, a dollar, maybe the next Google! ! Hey, even if it was .04 cents, I’d double my money, right? Unfortunately, after the promoters and insiders of the company leave the building, although these companies will continue to operate for a time, they rarely stay for long. Do you need more proof of a possible scam? Read the fine print. The words we want to believe are not there because of all the great statements and pretty graphics that have mesmerized us with the possible riches of the world. The fine print will actually tell you how much the promoter is paid, if you own stocks, and will highlight in many ways that this is indeed a highly speculative high-risk investment. In my opinion, the reality is that it is not an investment at all; It is a major scam that must be stopped.

So this week, when the next fancy mailer hits your home and you think, hey, it’s only $ 5000, let’s try! Throw away !!! Potentially good and large companies don’t start out on the OTCBB like pink sheets. The stock market has its own inherent risks and if you treat it like a casino; it is very likely that you will get the same result as when you go to a casino.