Stocks are the securities that represent ownership in a corporation. The stock holder can claim a specific percentage (according to shares values) of the company’s earnings and assets. Penny stocks are those stocks that trade under $5 or normally under $1 per share. Penny stocks frauds are now very common.
The most known and common fraud of small cap stocks is Pump and Dump. A group of speculators purchases the large number of shares of a company, and after getting their position, they release positive news about the stock, for getting the attraction of people.
The new small cap stocks investors start trading these stocks, the news about the stocks is normally wrong, but before it come to the knowledge of new investors, the stocks’ price usually sky rockets because of big demand, the original speculators exit with large profits while the new investors faces a great loss. The converse of Pump and Dump is Poop and Scoop.
Disclaimer
Fast Moving Stock does not own any shares or plan to get a position(s) in the company(s) anytime soon. Moreover, we have not been compensated for the posting of this article/report/analysis, as this is just an opinion of our writer/contributor. Not recommandation to buy or sell any stocks Read full
