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9/20/2013 2:38:28 PM
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This board was created to help "newbies" (like myself) learn about penny stocks and how they work BEFORE they jump in head over heals.
Take it from me, I have been here 3 months and LOST MY SOCKS, not knowing what the heck I was doing....Until I found this website.... it explains EVERYTHING! Everything about pennystocks... so have yourself a read of this website....... or read it below...This website SAVED ME AND ALOT OF MONEY!...NOW THAT YOU HAVE READ AND UNDERSTAND HOW PENNY STOCKS WORK LETS MAKE MONEY!
Anatomy Of A Pump & Dump Pump & dumps are stock hypes, often illegal, but always ruthless and usually within the penny or microcap market. The schemes are performed to artificially raise the trading volume and often the price of a stock ("pumping") through a campaign of hype which may include misinformation and/or misrepresentation. This enables insiders or other large shareholders to sell their stock ("dumping"). Dupes purchase the stock and unwittingly create a façade of legitimacy. This can entice even more people to believe the hype and buy even more shares. Once the schemers have sold their shares, the pumping ends, and the share price plummets.
There is only one reason that penny stock insiders spend money to promote their stock. It is so that they can sell their own stock. Often, dupes will buy into the story that, "We're just trying to increase shareholder value". Well we challenge anybody to find a penny stock that has been the subject of a promotion and has been able to maintain its increased share price for more than just a few days. The share price of a promoted stock will obey the law of gravity 100% of the time. There is only one way to permanently increase shareholder value and that is through hard work and legitimate results.
There is this perception that the purpose of a stock promotion is to increase the share price. On the contrary, the purpose of a stock promotion is to increase trading volume. An increase in share price is purely a bonus to the insiders selling. In order for the pump and dump to be successful, bids must come into the market. While bidding up the stock is preferable, the insiders are more concerned about getting buyers to take their stock at any price. As they will never relinquish control, the insiders are always free to issue themselves new stock whether in lieu of payment for services rendered, by exercising stock options or warrants, or employee bonus programs. Therefore, the price that the insiders get for their stock is of secondary importance.
16 Ways To Recognize A Pump & Dump
1. SPAM EMAIL
A legitimate company will never send you spam email. First of all, spam is illegal. Secondly, all the information that they would need to get out to the public is disseminated though press releases. If they need to make themselves aware to the public, they do it through a number of legitimate campaigns such as advertising, technology fairs and the like.
2. STOCK TOUTS
Sometimes emails received are from a free subscription based touting service. Sign-ups are how these touts get around spam laws. However, the intent is the same: to con you out of your money. These touts are paid by the people intending to dump their stock on you and usually say so in the fine print of their promotions. While their names are constantly changing currently subscriptions are available to GrowingStockReports.com, EpicStockPicks.com, Eastwind Research, Penny Stock Alerts and dozens of others. These sites often tout the same stock and there is a good reason for that. Touts usually own many touting sites and promote under various names in order to give the perception of a wide following for the particular stock they are touting. StocksGoneWild.com, and EpicStockPicks.com are sisters as are QualityOTC.com and BestOfPennyStocks.com.
MoneyTV with Donald Baillargeon is an example of another touting service paid for by insiders wishing to promote their stock under the perception of a TV interview show. The fact is that these insiders pay to be on this "show" and just about the only place you'll see the interview is on MoneyTV's own website. The insiders will usually disseminate a press release bragging about how they were interviewed on MoneyTV in an effort towards self-importance.
3. THE BACKGROUND OF THE OFFICERS
There's an old saying, "Once a crook, always a crook", and that's why it's always a good idea to see who is running the show at the company. Verify his resume. Most companies at one time, will offer up the qualifications of the President, CEO or other officers. Check his past involvement with public companies and the past performance of that stock. Chances are that if he's been involved with past pump and dumps or other schemes, you're now looking at one that is heading in that direction. Also, it is a good idea to look into court records of the individual(s) involved and their previous companies and see if anyone has been involved in civil or criminal proceedings, especially for fraud.
4. MESSAGE BOARD CONTENT
Yes, forums such as investorshub.com, siliconinvestor.com or the Yahoo Finance Message Boards usually contain contributions from child-like posters who are there for no other reason than to try and convince themselves that they made a good investment. But you can often find the touts or Investor Relations guys posting anonymously trying to keep the pom poms shaking and keeping the naysayers in check. They know that people who are apt to follow spam email or stock touts probably consider these message boards to be research so they want to bluster about their great investment and brag about all the money they are supposedly making. These are the guys who call anybody negative or questioning the company a "paid basher" (there is no such thing) or the ones who claim they have done their "DD" ( due diligence) when there is really none to be done. When you ask what DD they did, they will be vague with their answer or give a non-answer, with a "Because I said so" kind of response. They are also the ones who offer up lame excuses for down days such as naked short selling (does not occur in the penny stock market) or MM (market maker) manipulation. They are also the ones who make bold and baseless predictions like, "This is an easy ten-bagger" (stock price will increase by a multiple of ten).
5. PRESSURE TO BUY IMMEDIATELY
Stock touts and other promoters will do anything to keep you from thinking, using words like, "You'll miss the boat" or Everyone in the know is getting in right now" or "the entire street is talking about this stock". They'll even call you a fool if you "don't buy right now". Sometimes, you'll get the same high pressure email over and over again, a clear sign that they need more volume in order complete all the planned insider sales. If you're being given the "now or never" option, pick never and you'll save money every time.. You're being conned into participating in a pump and dump scheme.
6. CLAIMS OF BREAKTHROUGHS
Beware if the company claims to be an industry leader (do you really think a penny stock can be a leader in anything except possibly scams?) or has made a breakthrough discovery. A company with legitimate breakthrough technology is unlikely to be promoting itself on the penny stock market and will most likely have funding available to it within a variety of partnerships with major companies. These same companies will not likely be interested in dealing with a penny stock company. Also, question the likelihood of a fairly new company being the leader in anything other than schemes.
7. PRICE AND VOLUME UPSWING ON NO NEWS
If a stock's trading volume and price per share, show a recent and sudden increase, there is a good chance that the stock is being set up for a pump and dump. Especially if it has been involved in one in the past.
8. FINANCIALS (or lack thereof)
A legitimate company will always make recent financials available, even if it is a penny stock that is not required to file financials with the SEC. And if there are financials are they fabricated? Would a billion dollar company be found within a penny stock? Also, compare the assets of the company to the market cap of its stock. Is a company with a couple of thousand dollars in the bank really worth $100 million?
9. ISSUED AND OUTSTANDING
If nobody will tell you how many shares are out on the street or if that number is disproportionate to the stock price (a billion shares of a stock trading @ one tenth of a penny for example, stay away. Chances are a reverse split is coming and you will be left with only a few shares worth a fraction of what you spent.
10. LOOK AT THE HISTORY
Look at the history of trading on the company over the last year or so. If you see sudden big jumps in share price and volume over a few days followed by just as quick drops in price and volume, chances are that the stock has been the subject of past pump and dumps programs.
11. CLAIMS OF SHORT POSITIONS
Sometimes you'll hear that a particular penny stock will rise because of a tremendous short position in the stock and an upcoming short squeeze. We'll say it again. Large short positions in penny stocks don't occur because it is almost impossible for anybody outside of a market maker to take a significant short position in a penny stock. There has yet to be the penny stock that had a rise in price because of a short squeeze. Very few brokerage firms will allow you to short penny stocks and those that will encounter so many restrictions that it is impossible for a significant short position to exist.
12. CANCELLATION OF SHARES AND BUYBACK PROGRAMS
For some reason, dupes consider the announcement of a cancellation of shares or share buyback programs to be signs of authenticity of the insiders' intentions. Insiders will announce these programs part and parcel with a pump and dump scheme.
The cancellation of shares, usually involving an insider's return of some of his common stock to the company treasury, is usually meaningless because the insider(s) will never give back enough stock to relinquish control of the company. And as along as the insider(s) have control, they are free to reissue themselves stock under a number of schemes, once they have sold enough to put their control in peril. They also probably hold enough preferred shares, options and warrants to give themselves all the future shares they want.
Share buyback programs are usually announced with caveats such, "at the discretion of the board" and "from time to time", meaning they might buy stock when they want, at the price they want and as many shares as they feel like. There has yet to be a significant buyback program carried out on the penny stock market.
13. RASH OF NEWS RELEASES
If a previously quiet penny stock suddenly has a rash of news releases within a few days, chances are it is the subject or about to undergo a pump and dump program.
14. RELENTLESS TOUTING
If you are receiving email after email you can be sure that the insiders have not sold enough stock yet. If a tout feels the need to send you more than one email, never mind several emails per day, then he is desperately trying to convince you to buy the stock. If there are several touts who have suddenly come up with the same "idea" then you know that the insiders are pulling out all the stops. The more touts they hire, the more money they've spent meaning they have that much more stock to sell you.
15. PROMOTIONS AHEAD OF AN SEC FILING
If the company is a reporting company, take a look at the SEC filings. Is a quarterly (10-Q) or annual (10-K) report about due, or worse overdue? If the promotions are beating SEC filings to the punch, chances are they are trying to get you to buy the stock before the bad news is about to be revealed. Bad news may include a significant increase in the number of shares outstanding or liabilities and/or a significant decrease in cash or other assets.
16. ANNOUNCEMENTS CONTAINING CAVEATS
Look for the caveats in press releases and SEC filings, which will may lead to an easy out of the announcement. For example, financing of up to x dollars. An option to acquire... Will buy back up to x dollars of stock from time to time at the discretion of the Board of Directors. Our favorite term is "best efforts". If the announcement contains an easy out, chances are it will be exercised.
9 Unscrupulous Things A Tout Will Do To Gain Your Confidence
Don't ever let go of the notion that stock touts are not working for you, no matter how magnanimous they sound. They are working for their clients, namely the insiders who hired them to them to promote, market and pimp their stock. These touts rely on the success of their current promotion to be able to get them future clients and promotions. Their success is gauged by their ability to separate you from your money. As a result, they will say anything to make you believe that they are credible and their clients are the real deal.
Here are some of the common lies a tout will spout in order to gain credibility for himself and his client:
1. AS SEEN ON TV
Touts often like to make themselves sound important and credible, concocting lies about their connections and visibility. One of the more common lies they post on their website is the "As Seen On" boast where they'll post the logos of television networks and important websites to give you the impression that they've been relied on as a source of information by journalists. This is an out and out lie, as no legitimate media is going to rely on these hustlers for any information. The only time you'll may ever seen a penny stock tout on TV is if one is busted for running a massive stock fraud. In fact, we're pretty sure that any of these news organizations would have attorneys issue a cease and desist letter if they got wind of their trademarked logos being used for these devious schemes.
2. CLAIMS OF RESEARCH
"We are working hard and researching companies so that we can bring you our next pick," The only research these guys are conducting is to find the next insider who will write them a check. Then the "exhaustive" research they've done on their client company will consist of parroting the company's press releases within the tout's own mailings. They are not "discovering" undervalued plays or finding "unique opportunities" or presenting you a "revolutionary" company.
3. PREDICTIONS OF ASTRONOMICAL GAINS
"Easy 3 bagger!" or "Is this stock going to double tomorrow?", or "This could Soar 300% tomorrow!". Not only are these kinds of price predictions an absolute indicator of a pump and dump, they are 100% illegal. It is fine to set a price target based on solid research. But making outrageous prognostications of ridiculous increases in a short period of time is fraud. And many have gone to prison for it.
4. PREPOSTEROUS NOTIONS
"Is GOOGLE about to buy out this company?" You get this kind of rhetorical question a lot from touts trying to put a bug in your ear. Just as illegal as making ridiculous predictions of share price increase, you can be guaranteed that whatever con job the tout is trying to make you believe, it is never going to happen.
5. FANTASY RESULTS
Touts always like to use the highest attained share price as a sign that "they were right" Often they will give only partial reports on the day's trading of their promoted stock. For example, they'll boast that, "the stock gained as much as 700% today", without mentioning that the stock closed down 50%. Or they'll broadcast the stocks gains without mention that only a few shares traded. And they'll always forget to talk about the stock tomorrow, when it has given back all of its gains and then some.
Our favorite boast is when they'll reissue an alert on a past tout. "We've been right before on this stock and now we think it's ready for another run." What they forgot to tell you is that the stock is now trading at a lower price than it was when they issued their first alert. In other words, they forgot to tell you that a ton of people lost money on the stock directly because of this tout's last recommendation! They bought it at higher prices and were left holding the bag or sold at lower prices when the promotion ended.
6. BLAME IT ON THE SHORTS
If a stock promotion hasn't been successful then it must be the fault of the naysayers and the shorts. It couldn't possibly be that nobody was buying the story or that insiders were selling into the promotion. Comments in follow-up emails like, "We were battling with the shorts", are a sure sign that a pump and dump program was on. The battle was not with the shorts but with the insiders who were filling all the bids they could. After all, if the so-called shorts were willing to sell stock at lower prices, then why wouldn't they have hit bids prior to the promotion?
7. COMPENSATION DISPENSATION
Touts are required to disclose their compensation and name their benefactors within their promotional materials. Many refuse to do so, thereby blatantly breaking the law. Others will outright lie and claim that they were not compensated for their work. Still others will overstate their compensation in order to give the appearance of a massive promotional effort thereby lending hope to an extended campaign. This type of ruse has proven very effective in the past with claims of $2 million dollar promotional campaigns. One would have to question how a company with a few hundred dollars in the bank would expect to pay for a $2 million dollar promotion if it was not by selling stock. Furthermore, a reasonable person would question whether that two million dollars would not have been better spent on executing the company's purported line of business.
The most common form of compensation disclosure fraud is the "Third Party" con. Insiders hide their intent to sell stock by having some third party hire the tout, thus leaving the insiders free to claim innocence and lack of knowledge of any pump and dump scheme. They will sometimes even take the step of deflecting responsibility by issuing a press release refuting the promotion, deeming it "unauthorized" and claiming that it has no knowledge as to who the perpetrators of the campaign might be. This often occurs after an inquiry by the SEC or other regulatory body.
8. SHELL GAME
Occasionally, a tout will take the good news from one company and "accidentally" apply it to another, dormant penny stock with a similar name. He'll buy up a bunch of the dormant company's cheap stock and then tout the real company's news as if it belonged to the dormant company. Although this "error" is usually recognized in fairly short order by investors, it still often enables the tout to cash in from those who did not immediately see that they were being conned.
9. BAIT & SWITCH
To make their real pick seem more legitimate, a tout will often pick a real company to tout along with the scam company. In this way, he is trying to get you lump in the two companies together and believe that they have similar legitimacy. You'll see a story about a $100 stock or two touted together with the story about a 5 cent stock and the hope is that you'll think, "Hey maybe the 5 cent stock is a better buy."
Sometimes, the tout will even make the scam even look like an after thought. For example; "We really like gold stocks right now, which is why you should look at our favorites: ABX and GOLD. We think that GGRI could be an up and coming player too." While ABX and GOLD are legitimate and actual gold producers, GGRI was and is a sheet pink scam.
About Us/Our Mission PumpsAndDumps.com is a public service dedicated to ending penny stock schemes which hurt the innocent, especially seniors and students and others who are easy prey to get rich quick schemes. These dupes are victimized by those who perpetrate penny stock fraud and the promoters who provide aid and comfort to them.
Contrary to some belief, we do not short stocks for three reasons. 1) Shorting penny stocks is just as poor an investment decision as owning penny stocks; 2) Most penny stocks are impossible to short in significant quantities by anybody but a market maker; and, 3) We wish to remain unbiased and unencumbered.
Neither do we get paid by anybody to publish the information or conduct the research we do. We base our subject matter on a number of factors; including, but not limited to, the pressure of the Pump & Dump scheme, its success at creating victims; and, the blatancy of the false information disseminated by the perpetrators
Once a stock has been listed as a subject of a Pump & Dump scheme, it is impossible to have it removed from the historical list of promotions that we call the "Hall of Fame". Companies cannot buy their way off the list at any price.
In order to remain as transparent about our motives as possible, we forward every advisory and alert to members of enforcement at the United States Securities Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), by email, to addresses made available to us by these regulators.
While we answer all emails submitted through our Contact Us button on our website, we remain anonymous and we do not publish demographic information for several reasons. First and foremost is our physical safety. There are many schemers out there who will do whatever is required to remain free to cheat the public. Secondly, we do not wish to be hassled by those displeased with our information or those pleading with us to investigate particular schemes.
PumpsAndDumps.com is owned by a corporation registered in the Country of Nevis.
Everyday we get asked why we maintain this money losing website and who it is we are trying to protect. Some of the diehard penny players and the scam perpetrators even laugh at us when a Pump and Dump goes up in spite of our warnings and that we point out the shortcomings of the company that is the target of the pyramid/Ponzi scheme. Incidentally, penny stock promotions are almost always pyramid and or Ponzi schemes.
Let's make one thing clear: We are not here to stop Pump and Dump schemes. Only the SEC and other ball-less agencies of the Federal government can do that.
Also, in spite of the lies and accusations created by the same people who perpetrate these schemes, in an attempt to discredit us, we are not secret pumpers and we are not shorters. Very few penny stocks can be shorted, by anybody that is not a market maker. Those pennies that can be shorted usually have very small quantities available. Anybody who tells you different is a liar, looking to get your money. Interactive Brokers is the most proficient broker out there at shorting penny stocks. In order to see if a certain penny can be shorted, go to their availability list by clicking here.
The truth of the matter is that there are many professional penny players who play most pumped stocks on the hopes that they are going to benefit on the misfortune of those less skilled in the game. And of course, the con artists who run these schemes make money every time. However, in order for someone to make money on a penny stock, be it player or insider, an equal amount of money is lost by the innocent and ignorant dupes out there. It is those people that are the targets of the schemers and that we are trying to warn.
This is not like the major market, because stocks in those markets at least have a hope of sustaining share price increases and see further rises. Legitimate penny stocks are few and far between.
Those who are taken for a ride in the penny market are generally those who need the money most. Seniors and students. They look to the penny market as their way of getting out of a financial jam in a hurry. Eventually most learn their lesson, usually after they find themselves in deeper holes.
We look at penny stocks like smoking and we are the Surgeon General, putting out the warning on every pack of stocks. The truth is that every day, people leave the penny markets. We know, because we get hundreds of emails every month, thanking us for our free service, wishing they had heard about it sooner, and swearing off these stocks. Because there are so many leaving the market every day, in order for these cons to work, the market needs a certain number of new penny players to enter every single day. This is akin to the cigarette industry needing a certain number of new smokers every day to replace the ones that quit or die, The penny industry does everything it can to induce new recruits, from sending out emails (often spam), to issuing hard mailer promotions with outlandish predictions, to advertising in newspapers, to paying shills to talk about their stocks on message boards and chat rooms, to advertising on unrelated websites. We simply apply the label, "Warning! Penny stocks can be hazardous to your health!"
Of course much like cigarettes, there are those who consider themselves smarter than everybody else and just won't listen. At least not until they get sick and die. That's ok with us.
To those who write to us and tell us we "saved" them, You're Welcome.
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GLER is gonna POP! only a matter of
09/20/13 02:38:28 PM
I will check USEI out for sure! your
08/24/13 09:23:40 AM
sounds good pal , thank you! GO USEI
08/24/13 09:19:24 AM
Maybe on a bounce... Lots of good info
08/24/13 01:31:07 AM
WRIT - hopin to make a run to
08/22/13 08:54:18 AM
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