Penny Stock Guru

Is it possible? Can a person make money by buying penny stock, sending spam to pump up the price and then sell it? It must work, because why would our inbox be filled with these types of spam all of the time?

What is penny stock?

Penny stocks are stocks that are being sold for under a dollar and that are usually being traded over the counter. It are usually stocks from very small companies.

What is spam?

Spam covers all unsolicited mail that is being sent out to an uncountable amount of addresses, promoting a product, business or service. Stock spams are mails in which a person you don’t know tries to sell stock to you by guaranteeing you lots of profit and no risks.

Who sends them out?

It could be a perfect stranger who tries to convince me to buy stocks from a company that has just introduced a superb product. Sometimes the spam comes from alleged newsletter publishers or self-proclaimed stock analysts who are happy to share this beautiful chance with you.
The Internet provides the spammers with the perfect playground. By using several techniques they can spam millions of people and not be traced.

Penny stock frauds usually involve the pump and dump scheme. A press release will be featured on the companies website, newsletters will be mailed out. All of this to convince you to invest in penny stocks from the company. The promoter puts all he has into selling you this great opportunity stock. He will email around, visit message boards, talk about it in forums or in chat rooms trying to seduce the innocent investor. When the investors start to buy stocks, this will create a high demand and the price will be pumped up. When the scammers then sell their shares when the price peaks, they will also stop promoting the stock and the price will fall down in a blink and all the investors are left with worthless stocks.

Another penny stock fraud is known as Front Running. In the case of front running, brokers or insiders buy up because they already know what’s coming, before the news goes public. Insider training is a related fraud.

The reverse thing of the Pump and Dump scheme is the Poop and Scoop scheme. Scammers will start spreading really negative rumors about a product or a company and by doing this shareholders will start to sell and the price will go down. The scammers will buy at a low price and when the rumors are stopped, the price will go up again.

Another penny stock fraud is circular trading. By using multiple accounts and trading the same stocks over and over again between this accounts, it will look like there is a lot of activity going on with those shares. Investors will buy them, the stock will rise and when it peaks the scammers sell the stock and run away with the money.

With the ability of the Internet of spreading multiple rumors at once, spamming persons, chatrooms or message boards, it is a place where all this penny stock frauds can be easily played. So beware if you get another golden tip in your inbox!s