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This is one of the most common scams that we see nowadays. Everybody I know has received spam emails with info about some stocks that will go up.
Furthermore, in those emails they will tell you exactly the day and the hour when the price for those stocks will start to increase.
If you are a beginner in the stock market there is a big risk that you will be fooled, mostly because initially the prices for those stocks will actually grow a little at that specific date, and you will tell yourself that this is probably your chance and decide to by stocks for that company also, hoping that their price will continue to increase. It probably will, but not for a long time. Before considering diving into this, just ask yourself why would somebody you don’t even know gave you priceless information about specific stocks so you can make a fortune on the stock market?
Let me explain how it works:
First, a small group of so called investors decide upon what stocks they will buy and most importantly when they will start buying. After that they do their best to spread the word around in any possible manner that they can think of and to as many people as they can, that the prices for those stocks will go up at the date and hour that they have previously decided.
When that time comes, they will start to buy stocks progressively and naturally the price will start growing. If you were curious enough to check if the information that you have received was true, you will probably be astonished watching the stocks going up and you will think that you don’t want to miss this opportunity. A large share of the people that have received that email will probably think the same way and also decide to buy those stocks and the price will grow at an exponential rate. This is what the “investors” were aiming for in the first place. When they consider that the price went high enough they will suddenly start selling the stocks and than is when you will be doomed. Soon everybody will want to sell in order to cash their profit but there will not be any buyers, so following a general rule of the stock market, where there is no demand the price for the stocks goes down; and it goes down really fast! Most probably you will not be able to sell the stocks for the price you bought them and not only you will not make any profit but you will actually loose money.
This is known as the “Pump and dump” scam.
The idea is not to trust a stranger that will give you this kind of information and if you are not and expert in stock exchange, higher a broker to take care of your investments or stay away from the stock market until you will know more about it.

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Technorati: Pump and dump scam, Stocks scam

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