Spam stocks are quickly becoming a major factor in pump and dump techniques. A spam stock is usually a penny stock that has a decent financial outlook and has been on a flat line for quite a while. They almost always have some recent positive news about the company that the spammers can PUMP in their spam.
The spam that you get in your in box will usually rave about the stock. They quickly go on to describe the current price, which is usually posted in the email as lower than what it really is at the time. This makes it so that when you go to look at the price you're shocked to see that the price has gone up already.
The useful part about these spam stocks is that they almost always go up dramatically for some quick gains. The real question is, is the rise in price because the stock has real value, or is it because the emails/spam caused a major rush in buying to drive up the price.
Keep an eye on your spam box you most likely have a few of them sitting in there right now. They've been sent out to hundreds of millions of people in hopes that the price will go up as advertised in the email.
So who is this hurting? Anyone who is holding the stock for the long term can be hurt quite badly. The sell off that follows this drastic rise in price usually has the stock sitting lower than what it started at. This is when the bad news about the company starts to surface instead of the good news which will further drive the price down.
If you're a short term investor, think about purchasing the next stock that comes into your spam box. If you're a long term holder, watch the spam to make sure if that if one of your stocks gets turned into a spam stock, get ready to bail out.
About the Author
Ryan has been investing online for over two years and is now running a forum for penny stock picks. www.pennystockpile.com
