Pump-and-dump Investing Scams

It is such a shame that stuff like this still goes on in the world, but unfortunately it is a fact of life if you plan on investing in the stock market. When you start investing you may begin by searching online for some good articles or resources. Also, you may sign up for some newsletters or submit your email address to websites for information. Soon after you do that you will discover that all these nice people start sending you such wonderful stock picks.

Well do not become one of the many people who fall for the old pump-and-dump scam everyday. Many new investors eyes become wide open with greed when they see that they could potentially make a lot of money quickly if they buy a ton of shares of a cheap penny stock. Unfortunately, there are pump-and-dump scammers out there hoping just for that emotion of greed to overtake common sense.

A pump-and-dump scam simply means someone is trying to pump up the price of a stock, usually a cheap penny stock, and then as the price goes up the pump-and-dump scammer sells all of their shares. This leaves the investors who were scammed with virtually worthless shares by the time they realize what happened.

So as a new investor, never let your greed overtake your common sense. Most penny stocks are penny stocks for a reason because they are worthless. Never buy a stock you receive through and email, regular mail, or through a phone call. There is no substitute for doing your own research when it comes to investing in stocks.

The stock market should never be thought of as a get rich quick scheme. I think too many people do not understand just how quickly they can lose money if they let their emotional greed control their actions. Remember the stock market should be treated as an investment tool not a casino.

By: Chad Surges

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Author: Chad Surges
Degree: Bachelor of Science (Business)
Career: Logistics Executive