Pump And Dump
The victims of this scheme will often lose a considerable amount of their investment as the stock often falls back down after the process is complete.
Traditionally, this type of scheme was done through cold calling, but with the advent of the internet this illegal practice has become even more prevalent. Pump and dump schemes usually target micro- and small-cap stocks, as they are the easiest to manipulate. Due to the small float of these types of stocks it does not take a lot of new buyers to push a stock higher.
Claims about how a stock is set to break out should be met with a considerable amount of caution. It is important to always do your own research in a stock before making an investment.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
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