PUMP AND DUMPS

What is a pump and dump?

"Pump and dump" is a form of microcap stock fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price. Once the operators of the scheme "dump" their overvalued shares, the price falls and investors lose their money. Stocks that are the subject of pump-and-dump schemes are sometimes called "chop stocks."[1][2]

I've only recently gotten into daytrading, as I was mainly swing trading in 2007. I have studied charts under a former broker since the early 90s, however I was a poor college student and unable to put on any real trades. When the market crashed in September/October of 2008, I decided to get into the market devoting about 75% of my free time to study charts, analyze patterns, learn new tools and studies, as well as doing real due diligence in small caps.

When I joined Investors Live, the pessimism there was intense. Everything that popped was a "pump and dump." It didn't matter what it was. If it moved more than 100%, it was because of fraud. Does fraud exist? Of course, but not on the scale as the people I've talked to insist that it is. Remember CTIC? It was banned in IL because it was simply a "pump and dump" and nothing more. Talk about doing DUE DILIGENCE! CTIC has move well over 1500% since then.

So because I was under the influence of these traders, I assumed much of what was moving from pennies was nothing but a scam from a shell company and the price was sure to drop and never come back.

Even today, I see people discussing pumps. In fact, the financial system according to many of them was merely a "pump and dump" on a large scale. Luckily I was under the influence of more experienced traders that I was encouraged to hold my financial positions through the bearish "everythings coming to and end" sentiment.

Why is this a bad thing to look at stocks in such a light? Because you start to assume that much of the moves you see are being pumped, and primed for their dump. You take for granted that there is a VERY REAL MARKET out there for stocks. Do people really think a fucking website has the ability to move a stock 1000% because they simply hyped it up???

Look at UOMO for what a real fucking pump and dump looks like. Yes, I'm cussing now because it boils my fucking blood. UOMO IS WHAT A PUMP AND DUMP LOOKS LIKE! GNVC, PPHM, any MANY PINK SHEETS ARE ACTUAL COMPANIES. Do we understand the concept of the stock market? Is it all just one pump for the benefit of a few?? Doubtful.

Once you start looking at stocks are pump and dumps, you stop analyzing charts. You stop using tools to analyze a pattern, analyze a trend, and you start looking for news based movements only leaving you out of 90% of the real trends out there. JAZZ was probably a "pump and dump" by many internet traders but it kept going. What a pump! WHere's the dump?? Oh yeah, that's right. There wasn't one because THIS IS A REAL FUCKING COMPANY WITH THE REAL POTENTIAL VALUE. Why do you think stocks run ahead of news? Because traders/investors want in BEFORE the value sets in. It's a system of greed that works because in the end, the money goes to where it belongs.

My point: Quit looking at all price movements as pumps and start analyzing patterns, studying the market, and start learning why something is moving rather than it being a pump.