RE: Sellers10 Nov 2020 19:43
Avoid the pump and dump.
Share ramping and 'pumping and dumping' routinely takes place each day on the hundreds of online share-dealing message boards and in thousands of spam emails that are sent out across the world, but very few people are actually brought to book.
Most of the ramping is crude and obvious to spot, particularly the spam emails littered with spelling mistakes and capital letters, but some of the more sophisticated rampers can make a difference to a stock's price.
But what's the problem if the share price is going up? Surely the buyers will benefit and make money? That's often not the case as the shares tipped are typically small penny shares that have a wide spread - the difference between the amount it costs to buy and sell the shares.
As the buying artificially inflates a company's share price, the tipster will sell the stock quickly once they are in profit. When the buying has subsided, the price often rapidly falls, leaving those new investors with shares they can't get rid of without incurring a loss.
Most UK investors simply ignore these emails, but another minefield is online message boards where rampers pretend to be in the know about a particular stock. A common tactic is to create a sense of urgency by suggesting that news, such as a contract win or takeover approach, is about to be released that will send the stock soaring.
Unfortunately, investors are still falling for the scams. 'Ramping has become more subtle and sophisticated and it's easy for somebody to be taken in. I stopped using certain message boards a while ago because people were offering opinion behind a faceless computer without backing up their statements with fact or argument. I won't take share tips from somebody unless they are prepared to give me their name and address.
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