| Online brokerages have revolutionised the | | | | Manipulations of stock price can be achieved |
| investing industry. This has enticed many | | | | in subtle ways. Money managers have the |
| people to give investing a try even if they | | | | ability to start rumors about stocks that |
| have no idea what theyre doing. The process | | | | they would like to move without paying a |
| requires a lot of research and a little luck. | | | | large price. The rumor works to lower the |
| A quick search online can bring an individual | | | | price of the stock and create liquidity in |
| investor all the information they need in | | | | that company™s stock. The rumors run |
| order to make a few simple decisions. | | | | unchecked and spread through the market like |
| Unfortunately, there is a lot of | | | | wildfire. |
| misinformation out there regarding investing | | | | |
| in the stock market and in reference to | | | | For example, if a money manager wants to |
| specific stocks. The process of manipulating | | | | purchase some stock in Company A, they can |
| potential investors to scam them out of their | | | | start a rumor that the company is on the |
| money has followed the stock market into the | | | | verge of bankruptcy. This lowers the price of |
| 21st century and online. Dont be scammed out | | | | the stock and allows the manager to purchase |
| of your money read this article and avoid the | | | | it at the desired rate. This works in the |
| pitfalls. | | | | opposite way as well. If the manager wants to |
| | | | sell stock for Company B, a rumor can be |
| 1. Pump And Dump | | | | started about an emerging invention from that |
| | | | company in order to inflate the stock price. |
| In this scam, you are misled about the | | | | These subtle attempts at manipulation can be |
| projected earnings and growth of a company. | | | | the hardest for investors to spot, and |
| Uninformed investors purchase the stock. The | | | | therefore the most difficult to avoid. Since |
| price tends to rise, and as it does, the | | | | rumors are part of the business of the stock |
| original scammers sell the stock off to new | | | | market it is hard to track down where the |
| uninformed investors and take the profits. | | | | rumors started. |
| Once all the hype drives up the price high | | | | |
| enough and the accumulation pressure | | | | Additionally, there is no paper trail to |
| disappears, the stock crashes and the | | | | track down the money managers who practice |
| investors lose money. | | | | this sort of manipulation. Fortunately, these |
| | | | inflations or devaluing of stocks are very |
| 2. Avoid Penny Stocks | | | | short lived. Within a short period of time |
| | | | the rumors are proved untrue and the stocks |
| Penny stocks are stocks less than $5. 00 in | | | | bounce back to their true value. These |
| value. The reason they are so low is because | | | | schemes fortunately never have any long term |
| the company is probably going bankrupt. To | | | | impact on the market. Maintaining a long term |
| avoid the majority of these scams, avoid | | | | investment focus of owning good companies for |
| investing in penny stocks. The hype | | | | long periods of time will offset any of these |
| associated with pump and dump scams is | | | | manipulative rumors. |
| similar between scams. The fake press | | | | |
| releases and research reports always tout the | | | | 4. Manipulation |
| given company as being on the verge of a | | | | |
| world changing technology, cure for a disease | | | | If you want to play with the big boys, you |
| or fantastic new product. The focus is always | | | | have to be able to take a little bit of risk |
| on the glorious future of the company, but | | | | when you invest. Cheaters and manipulators |
| very little information is given about the | | | | exist in every industry, and are especially |
| current status of the company in question. | | | | concentrated in an industry that is full of |
| | | | money like the stock market. Having a diverse |
| 3. Rumors | | | | portfolio of stocks can surely save you from |
| | | | losses that would otherwise hurt you |
| The second type of stock market scam is | | | | financially. |
| characterized by rumors and traders tricks. | | | | |