pump and dump

Pump and Dump

A highly illegal practice occurring mainly on the Internet. A small group of informed people buy a stock before they recommend it to thousands of investors. The result is a quick spike in the price followed by an equally quick downfall. The people who have bought the stock early sell off when the price peaks.

Notes:

Many pump and dump sites tend to recommend companies that are OTC and have a small float. The small float means more volatility.

It is virtually impossible to make money from these web sites unless you are the proprietor. The SEC eventually busts all of them.

See also: Boiler Room, Bucketing, Bucket Shop, Churning, Circular Trading, Float, Front Running, Jitney, OTC Market, Poop and Scoop, SEC, Tip from a Dip, Volatility

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pump and dump

Market manipulation in which a thinly traded stock is accumulated, promoted, and subsequently sold at an artificially high price to unsuspecting investors. Internet chat rooms where investors gather investment information from unknown parties facilitate this illegal practice. Compare poop and scoop.