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Investment Scams

January 20, 2010 – 1:12 pm

The Internet revolution has spread to almost every household in the United States and it is growing fast in the rest of the world. The average citizen can now tap into information that at one time was reserved only for the privileged few. Nowhere is that more true than in the investment world.
The types of scams are the same as they have always been only now we have the expanded version and with the power of the internet the marketing of these plans has gotten far easier and cheaper. Therefore, it is now much more important to learn how to recognize and avoid the scammers.

A common form of internet investment manipulation is the use of bulletin boards and blogs. The scammers enter various bulletin boards or participate in blogs touting the very same stocks in their e-mails and Newsletters. In fact it makes sense as a strategy. Often the fraudulent bloggers quote the fraudulent Newsletters. This is in the best tradition of a legitimate multi-prong advertisement campaign. These guys are good. They repeat the story on as many blogs and bulletin boards as they can using different names. The internet makes it easy to hide who the scammers really are and as professional scammers they will sound very convincing in the blogs and bulletin boards in which they post their opinions. How do they make money as they try to push the public in to buying these stocks?

It’s an old story. It’s called ‘pump and dump’. They own shares of the companies they are ‘pumping’ to you as great opportunities. While they pump up the price they simply ‘dump’ or sell their shares at much higher prices than they obtained them. Usually we are talking penny stocks where pennies per share means huge percentage movements. If it goes from ten to thirty cents, that is 200%.

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