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FINANCIAL CHRONICLE™ » EXPERT CHRONICLE™ » Pump and Dump

Pump and Dump

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20111222

Pump and Dump Empty Pump and Dump

sriranga

sriranga
Co-Admin
Pump and Dump Pump-a10

Pump and dump is a term referred to an investment scheme which attempts to boost the price of a company’s stock through false and misleading promotions or highly exaggerated statements. As long as there have been stocks, there have been stock fraudsters who seek to inflate the price of stocks. Usually the con artist is a third party person who is not in any relation to the company about to be scammed. The only In most cases the company itself is clueless that it is part of a scam. It’s chosen because its stock is selling for pennies a share, making it easy for the scammer to acquire a huge number of shares with a minimal investment. Due to the small float of these types of stocks it does not take a lot of new buyers to push a stock higher. Often the promoters will claim to have inside information about an impending development or to use a great combination of economic and stock market indicators to pick stocks. In reality, they are only thieves who will earn a quick profit by gaining lots of investors. Once the price is high enough they sell their shares and stop inflating and promoting the stock which ultimately ends with a sharp fall in prices and thus investors lose their money. Similar but inverse scam is Short and Distort.

HOW PUMP AND DUMP SCAM WORKS

a) You need a worthless stock, with a tight float and which is thinly traded. Small companies are needed as a precondition. Tight float means that most of the stocks are held by insiders and promoters and not by the general public. The reason for this is that it is much easier to manipulate the price of the stock when there are fewer stocks held by the general public since fewer buying of stock is needed to increase the price. You now buy an otherwise worthless stock at low prices. This sets the stage for to make money when the stock price elevates.

b) You start a promotional campaign to create interest in the stock. You use advertising campaigns, cold calls, newsletters, newsgroups, message boards, chat rooms, emails, seminars and any other media to promote the stock. Information used to promote the stock is said to be a rumor, inside information or your unbeatable technical and economical analysis. Investors are being enticed with visions of making the big score, quickly and without much risk. Your promotions will make investors swim in the water of excitement. Essentially, you are playing on the investors strings of greed to try to make the investors feel that he can’t miss the next great investment play.

c) You now attempt to increase the price of a stock. The stock chosen is thinly traded, so you and insiders can quietly raise the price by buying up the stock. Instead of putting bid offers at lower prices, they take the ask bids out and go up the price ladder. Since there is little public float, it doesn’t take a lot of buying to get the price up.

d) You have increased the price of a stock and now dump it at a higher level. You leave with a high profit, while other investors face a sharp ride to the south.

Source: http://www.bustathief.com
Please read the following ling
http://forum.srilankaequity.com/t14251-short-and-distort-naked-short#92022

Inthikahb M Wazeer and Vishwanarth like this post

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Trillionaire

Post Thu Dec 22, 2011 6:42 am by Trillionaire

Thank you! Clearly explained! Very Happy

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Post Mon Dec 26, 2011 3:04 pm by Quibit

good contribution. thank you

sriranga

Post Mon Dec 26, 2011 3:38 pm by sriranga

@Quibit wrote:good contribution. thank you

Thanks for your valuable comment. Which I really appreciate.
What I read in the other websites, always I wish to share with everyone.
Again thanks for your valuable time to originate this forum which enable us to share our experience,thought etc etc...
Happy season greetings.

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Post Mon Dec 26, 2011 5:43 pm by HotBargain

this what happen now no? sellers on holiday make easier, we sell before they sell and we can dump on them! Very Happy

smallville

Post Mon Dec 26, 2011 7:02 pm by smallville

@HotBargain wrote:this what happen now no? sellers on holiday make easier, we sell before they sell and we can dump on them! Very Happy

I think the best way to beat the game on their own game is avoid playing.. Or we have to calculate their next move and buy before them..

i.e. a person who buys a million of shares in one penny stock can up the share 1 rupee and dump.. still nealy 1 milion profit in few hours.. Wink

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Post Sat Mar 03, 2012 9:04 pm by Gaja

@smallville wrote:
@HotBargain wrote:this what happen now no? sellers on holiday make easier, we sell before they sell and we can dump on them! Very Happy

I think the best way to beat the game on their own game is avoid playing.. Or we have to calculate their next move and buy before them..

i.e. a person who buys a million of shares in one penny stock can up the share 1 rupee and dump.. still nealy 1 milion profit in few hours.. Wink

Well if you want to play with those I THINK YOU NEED TO HAVE SOME SUPPORT FROM THE BROKERS AS WELL

smallville

Post Sat Mar 03, 2012 10:03 pm by smallville

@Gaja wrote:

Well if you want to play with those I THINK YOU NEED TO HAVE SOME SUPPORT FROM THE BROKERS AS WELL

Yeeeee.. without the broker's support u cant succeed much.. U need to bribe ur broker to get some money wasters to attract ur shares.. so u can easily dump on them even Wink

Redbulls

Post Wed Sep 25, 2013 10:57 am by Redbulls

Time to read again.

Sidath

Post Wed Sep 25, 2013 1:30 pm by Sidath

if the CSE and the SEC finally introduce short selling, you can always short the shares that they are trying to manipulate when they drive up the price. By shorting you prevent the share reaching an higher price from which they will dump

Kithsiri

Post Wed Sep 25, 2013 2:19 pm by Kithsiri

You have to be smarter than a FOX when dealing such issues.Very Happy 

UKboy

Post Thu Oct 03, 2013 2:38 pm by UKboy

CSE is not alone when it comes to pump and dump..
It's everywhere...!
If you are at the right place at the right time, you would not complain about it at all..!!
You don’t need to be a manipulator to get something out of such spike. All you need to have is good sense.

ThilinaM

Post Tue Dec 10, 2019 3:48 pm by ThilinaM

According to available discussions bartleet is baned due to pump and dump scheame.
thease days most of good shares are undervalued so innocent investors will do not loose if they tightly hold share for long time . assume not bought 30% + inflated prices . but never traped to useless shares such like RHL Reef those will kill a innocent investor he have to wait at least 10 years for another pump and dump since companys will not grow

Brokers are indirectly trading . all indirect tradings should be identified (at least family members)
and should be penalised. by this methord richs will dump there shares to poors at high prices. 
i see this methord is continuing and continuing. im happy that bartleet faced this( i even have account in bartleet but they should be legally punished for there wrong. i have stayed in market long time that i can tell 90% accurately when share is going up its pump and dump . but new investors will have no such expirience. srilanka will be poor due to this since small investors fear to invest after there big lossses. brokerage firms will cut there balls without no mercy.

ThilinaM

Post Wed Dec 18, 2019 8:05 am by ThilinaM

Volatility is the best thing for proffesional investor. dont fear to volatility it will give chance to buy at low levels

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Post Wed Dec 18, 2019 8:57 am by Gajaya

True

Invest-Wise

Post Wed Dec 18, 2019 4:31 pm by Invest-Wise

Absolutely...if market is only going up then it doesn't give a change to trade. I picked up Tkyo x and PAQ recently as its dropped in then last week or so.  I will keep collecting on drops. :-)

fireshelter

Post Sat Jan 11, 2020 11:13 pm by fireshelter

alien alien alien

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Post Sun Feb 07, 2021 4:46 pm by celtic tiger

pump and dump is a form of securities fraud that involves artificially inflating the price of an owned share through false misleading
positive sentiment - that's how  Wikipedia explained pump and dump. I am trying to warn our retailers about PUMP AND DUMP now because CSE has reach that destination. funny enough SEC knows this and try to control without damaging the positive sentiment but I think under pressure from powerful people. It will be interesting to see which SHARES they were talking about in their love letters to brokers . my guess  LOLC ,EXPO AND VONE

KingMaker2020 and Mr. Wayne like this post

samaritan, Kipling and Love Boy dislike this post

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Post Mon Feb 08, 2021 1:35 pm by celtic tiger

bitter truth

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Post Thu Feb 11, 2021 1:18 pm by celtic tiger

I think they did dump most of the VONE,LOLC AND EXPO .It's bad for some but good for the market .

xhunter

Post Thu Feb 11, 2021 2:51 pm by xhunter

I dont have single EXPO share in my portfolio, EXPO market price is backed by its earnings. so definitely it is not pump and dump (EXPO).
real "pump" is started using 2 events.

1. plant an idea that IN and DPs are fighting each other for the 1st position.
2. share split notice for set of DPs shares.

RCL was not in the share split list, but they were able to bring RCL from 220 to 430 only in 4 trading days.
how on earth share split increase the price of a share?
if someone say it become affordable, is this really true? how many of you has give up buying a share because you only have money to buy a half of that share?

but lot people even in this forum said , after share split this will be the price, that will be the price.

Nandun, Wonderer and Gowri123 like this post

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Post Fri Feb 12, 2021 8:30 pm by gamaya

This is too dangerous. Better exit than having a mental breakdown like in 2011. Newbie s this maybe terribly entertaining. But you are safer in a Bamba casino. When you realise it will probably be too late.

Mr. Wayne likes this post

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Post Fri Feb 12, 2021 8:46 pm by MaJa

@xhunter wrote:I dont have single EXPO share in my portfolio, EXPO market price is backed by its earnings. so definitely it is not pump and dump (EXPO).
real "pump" is started using 2 events.

1. plant an idea that IN and DPs are fighting each other for the 1st position.
2. share split notice for set of DPs shares.

RCL was not in the share split list, but they were able to bring RCL from 220 to 430 only in 4 trading days.
how on earth share split increase the price of a share?
if someone say it become affordable, is this really true? how many of you has give up buying a share because you only have money to buy a half of that share?

but lot people even in this forum said , after share split this will be the price, that will be the price.
It s not affordability. It s psychology.
Generally in any market an illiquid share at high rates with a P/E of 10 would trade at a P/E of 12-15 when it s split in to 10 or 20.
Undervalued become a more market rate share.

We as investors should pick what to buy and what not to buy.
A classic example is EBCR and DIPD or HAYC.
EBCR was trading at 1300 with a P/E around 7, with the split it went high to P/E of over 25. This is unwarranted.
DIPD and HAYC were both trading around P/E 5 and with the split went up to 8-12P/E which is more of a market average - or still a bit under valued.
Obviously Other than current financials,need to look at future potential too.
We need to pick which to go after and which not to.
* above shares were picked as examples.

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Post Fri Feb 12, 2021 9:37 pm by celtic tiger

1.Some of this hot favourite  shares showing great results because of government import restrictions, which is not going to last long.
2.Then if you look at some of the quarterly reports, turnover down but net profit sky rocketed .
3.cse volatility is too high(like crypto market)- this is artificial
THIS IS WHY I think some thing is not right here ,may be it does not fit the exact explanation of pump and dump but...??? time will tell you the hole story .

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