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!"
Tuesday, January 29, 2008
Monday, January 28, 2008
Emotional Mistakes
I've been asked for advice recently regarding what I think about the current state of the stock market. It's recent declines has impacted the marketplace and reitterated the key differences between those who should participate in the stock markets and those who should give it a second thought.
Participating in the stock market, if you don't know what you are doing, is the riskiest type of investment vehicle you can get into. However, with that high level of risk comes a high level of reward. As a participant in this game, you have to first understand that risk and build a portfolio using only investible assets meaning, ONLY USE MONEY YOU CAN AFFORD TO LOOSE! This is the point where most people make their mistakes and end up in financial distress. Know what you are doing, and don't let the "greed glands" grow.
Also, understand that the markets will always have dips and slides. A healthy market, like a good stock or index will have to have some sort of upward and downward movements every now and then. Without these changes, there would be no movement in the market and thus no profits to be made. As the old adage goes, "What goes up, must come down." The problem that the average investor doesn't understand is when a stock price goes down, it doesn't mean it is a bad thing, nor does it mean you lost money. It just implies you've lost some earnings in the short term, and possibly missed an opportunity to make some profits.
The common mistake:
In the stock markets, a loss is only incurred if you sell your stock when the price drops below your buy price. Meaning, if you buy a stock at $5/share today and the stock drops to $3/share tomorrow and you sell, then you lost $2/share.
What professional investors know is inevitibley the market will correct itself and the price will go up again. Professional investors know not to let their emotions take over, not to give into fear of loss, and most of all, NOT to take a LOSS! Another classic adage, "You don't invest to buy high and sell low."
The moral of the story: There is no space for emotions in the open market. Investing isn't personal, it is business. And most importantly, only invest what you are willing or able to lose.
Participating in the stock market, if you don't know what you are doing, is the riskiest type of investment vehicle you can get into. However, with that high level of risk comes a high level of reward. As a participant in this game, you have to first understand that risk and build a portfolio using only investible assets meaning, ONLY USE MONEY YOU CAN AFFORD TO LOOSE! This is the point where most people make their mistakes and end up in financial distress. Know what you are doing, and don't let the "greed glands" grow.
Also, understand that the markets will always have dips and slides. A healthy market, like a good stock or index will have to have some sort of upward and downward movements every now and then. Without these changes, there would be no movement in the market and thus no profits to be made. As the old adage goes, "What goes up, must come down." The problem that the average investor doesn't understand is when a stock price goes down, it doesn't mean it is a bad thing, nor does it mean you lost money. It just implies you've lost some earnings in the short term, and possibly missed an opportunity to make some profits.
The common mistake:
In the stock markets, a loss is only incurred if you sell your stock when the price drops below your buy price. Meaning, if you buy a stock at $5/share today and the stock drops to $3/share tomorrow and you sell, then you lost $2/share.
What professional investors know is inevitibley the market will correct itself and the price will go up again. Professional investors know not to let their emotions take over, not to give into fear of loss, and most of all, NOT to take a LOSS! Another classic adage, "You don't invest to buy high and sell low."
The moral of the story: There is no space for emotions in the open market. Investing isn't personal, it is business. And most importantly, only invest what you are willing or able to lose.
Friday, January 25, 2008
Securities vs. Forex
Securities or a security is typically a certificate or an electronic book entry of ownership of a portion of a company as printed or allocated by an issuer. The issuance of securities are regulated under the jurisdiction of securities commisssions in their registered regions: provincial, state or country.
Foreign Exchange is the buying and selling of currencies on the open market. Foreign exchange or forex is a $3.2 trillion dollar, unregulated market built on the premise of predicting short term movements in the values of currency pairings.
Why pick securities over forex? There have been many recent current events that work for and against both types of openly traded investments. One very current and unfortunate event occured in New York just over a week ago which in turn affected many unsuspecting investors around the world. The fraudulent behaviors of a company called Razor FX,for example where those in control of the funds stole $68 million US from investors using a ponzi scheme.
Securities on the other had have taken a huge dip as the markets in the past week have hit extreme downfalls, as much as 300 point hits, with the speculation of recession in arms length.
The key differences between forex and securities is obvious and simple. Forex is unregulated leaving the gap for unethical privately managed fund managers to take advantage of investors who trust their funds are being used by professional investors. Also, private opportunities are often controlled by very few people. As we all know from the "Lord of the Flies" one head with full control leads to chaos. Responsiblity must be and should be share amoung the masses. With that said, the securities market is regulated, and with companies registered in the United States, they operate under the strictest of accounting standards and public transparency. Further, corporations are not controlled by one head, but by a board of directors, an elected CEO, and shareholders who together dictate the usage of funds. The usage of funds is made public knowledge in respect to securities regulation, making fraudulent activities difficult to achieve.
So which way is the better way? Securites is the way in my opionion as there's a lot of opportunity for returns if you know how to read the charts. One such company that I've been watching is traded on the Nasdaq. It's called Fine Line Holdings (FNLH), a penny stock with huge opportunities as they seem to be acquiring a range of assets, among them are wellness spas, an animations/cartoon company, and $125,000,000 worth of land in Cancun, Mexico.
Foreign Exchange is the buying and selling of currencies on the open market. Foreign exchange or forex is a $3.2 trillion dollar, unregulated market built on the premise of predicting short term movements in the values of currency pairings.
Why pick securities over forex? There have been many recent current events that work for and against both types of openly traded investments. One very current and unfortunate event occured in New York just over a week ago which in turn affected many unsuspecting investors around the world. The fraudulent behaviors of a company called Razor FX,for example where those in control of the funds stole $68 million US from investors using a ponzi scheme.
Securities on the other had have taken a huge dip as the markets in the past week have hit extreme downfalls, as much as 300 point hits, with the speculation of recession in arms length.
The key differences between forex and securities is obvious and simple. Forex is unregulated leaving the gap for unethical privately managed fund managers to take advantage of investors who trust their funds are being used by professional investors. Also, private opportunities are often controlled by very few people. As we all know from the "Lord of the Flies" one head with full control leads to chaos. Responsiblity must be and should be share amoung the masses. With that said, the securities market is regulated, and with companies registered in the United States, they operate under the strictest of accounting standards and public transparency. Further, corporations are not controlled by one head, but by a board of directors, an elected CEO, and shareholders who together dictate the usage of funds. The usage of funds is made public knowledge in respect to securities regulation, making fraudulent activities difficult to achieve.
So which way is the better way? Securites is the way in my opionion as there's a lot of opportunity for returns if you know how to read the charts. One such company that I've been watching is traded on the Nasdaq. It's called Fine Line Holdings (FNLH), a penny stock with huge opportunities as they seem to be acquiring a range of assets, among them are wellness spas, an animations/cartoon company, and $125,000,000 worth of land in Cancun, Mexico.
Thursday, January 24, 2008
The Basics of Money
The movie zeitgeist has a great interpretation of a piece of the story illustrating the background to the US banking system, the Federal Reserve, and the influence of the few families that actually control the monetary systems for their own personal benefits.
The importance behind the information in this video are the angles in perception the makers convey, including the structure of the printing and lending system of the Federal Reserve to print currency and charge an interest in the currency thus creating a self sufficient payment system for the users of the currency. Why is this important? Because money as we see it has no apparent value than the $0.001 it costs to actually print the paper note/certificate that we call money. The United States $ (USD) or the Canadian $ (CAD), or any other state issued note certificate.
What is currency?
Some would say that currency is money. Currency is actually just a unit of exchange, and money is one of many mediums of exchange and is widely accepted within a collective.
A long time ago people used the system of barter:
Bob has 5 oranges. He needs wants apples and potatoes. Carl has apples and wants oranges. Dave has potatoes but doesn't want apples or oranges. Bob trades Carl 5 oranges for 10 apples but he can't get potatoes. Barter's ineffectiveness lays in having an excess of a commodity (oranges) that you can't trade for what you want.
When money which is generally accepted is introduced:
Bob trades his 5 apples to Jim for $10. Bob takes $5 and trades it with Carl for 5 apples and takes the other $5 and trades it with Jim for 5 potoatoes.
What dictates the value of money?
The obvious and bottom line fact remains the value of money is dictated by the amount of goods and services which can be purchased by that money. This is highly dependant on who is willing to accept the money as a legitimate form of generally circlated tender. On this point, the circulation of the note in terms generally accepted tender is what validates and holds the purchasing power of money. Value is based on the want and need which is a function of its liquidity and circulation.
So what is money?
Money is any form of generally accepted tender used to facilitate the exchange of goods or services. Money can take many forms as it can also be anything and everythingso long as it is accepted in its marketplace. A simple IOU note made out to a friend, Air Miles, Pepsi Points, labour hours/time, and marbles and gum drops in a playground. If we accept it as a from of trade and we can leverage it to repurchase other goods and services, it is money.
Other forms of money:
- Stocks
- Bonds
- Time
- GIC's
- Treasury Notes
- RRSP's
- Insurance Policies
- Gold/Precious Metals
- Oil
- Stock Options
- Real Estate
- Option Notes
Open up your mind, and be free of what you think you know. Many people, will have to take the first step to cross the street, entering through dark alleys, and making your way on to the path of personal financial control. It is possible and it is attainable...in fact, it is only down the street if you can learn to see it with your own eyes. Join the knowing on "The In Street".
The importance behind the information in this video are the angles in perception the makers convey, including the structure of the printing and lending system of the Federal Reserve to print currency and charge an interest in the currency thus creating a self sufficient payment system for the users of the currency. Why is this important? Because money as we see it has no apparent value than the $0.001 it costs to actually print the paper note/certificate that we call money. The United States $ (USD) or the Canadian $ (CAD), or any other state issued note certificate.
What is currency?
Some would say that currency is money. Currency is actually just a unit of exchange, and money is one of many mediums of exchange and is widely accepted within a collective.
A long time ago people used the system of barter:
Bob has 5 oranges. He needs wants apples and potatoes. Carl has apples and wants oranges. Dave has potatoes but doesn't want apples or oranges. Bob trades Carl 5 oranges for 10 apples but he can't get potatoes. Barter's ineffectiveness lays in having an excess of a commodity (oranges) that you can't trade for what you want.
When money which is generally accepted is introduced:
Bob trades his 5 apples to Jim for $10. Bob takes $5 and trades it with Carl for 5 apples and takes the other $5 and trades it with Jim for 5 potoatoes.
What dictates the value of money?
The obvious and bottom line fact remains the value of money is dictated by the amount of goods and services which can be purchased by that money. This is highly dependant on who is willing to accept the money as a legitimate form of generally circlated tender. On this point, the circulation of the note in terms generally accepted tender is what validates and holds the purchasing power of money. Value is based on the want and need which is a function of its liquidity and circulation.
So what is money?
Money is any form of generally accepted tender used to facilitate the exchange of goods or services. Money can take many forms as it can also be anything and everythingso long as it is accepted in its marketplace. A simple IOU note made out to a friend, Air Miles, Pepsi Points, labour hours/time, and marbles and gum drops in a playground. If we accept it as a from of trade and we can leverage it to repurchase other goods and services, it is money.
Other forms of money:
- Stocks
- Bonds
- Time
- GIC's
- Treasury Notes
- RRSP's
- Insurance Policies
- Gold/Precious Metals
- Oil
- Stock Options
- Real Estate
- Option Notes
Open up your mind, and be free of what you think you know. Many people, will have to take the first step to cross the street, entering through dark alleys, and making your way on to the path of personal financial control. It is possible and it is attainable...in fact, it is only down the street if you can learn to see it with your own eyes. Join the knowing on "The In Street".
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