Learn How to Invest Money - No to Pump and Dumps

The following is a description of what a pump and dump is in the open market as described by the SEC.

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Pump and Dump Schemes

"Pump and dump" schemes, also known as "hype and dump manipulation," involve the touting of a company's stock (typically microcap companies) through false and misleading statements to the marketplace. After pumping the stock, fraudsters make huge profits by selling their cheap stock into the market.

Pump and dump schemes often occur on the Internet where it is common to see messages posted that urge readers to buy a stock quickly or to sell before the price goes down, or a telemarketer will call using the same sort of pitch. Often the promoters will claim to have "inside" information about an impending development or to use an "infallible" combination of economic and stock market data to pick stocks. In reality, they may be company insiders or paid promoters who stand to gain by selling their shares after the stock price is "pumped" up by the buying frenzy they create. Once these fraudsters "dump" their shares and stop hyping the stock, the price typically falls, and investors lose their money.

www.sec.gov/answers/pumpdump.htm

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Pump and dump schemes are out there, but with a trained eye, it isn't hard to see what is and what isn't being pumped. The difference, however, lays in the general value of the stock itself. Is the stock worth anything? A good stock will be one not with a manifested stock price, but actual value in hard assets. That value is what make the stock's price hold and sustain itself when traded in the open market. So when you're learning how to invest money in a stock, do the proper research and due dilligence and know what the stock owns, and base your buy from there. Like it's been said before, "There's no place for emotion in the open market!"