What is Stock Spam?

Stock spam has nothing to do with the amount of shares that someone pours into the market. Instead of that, in this case, spam is meant in the sense of e-mail spam and spam in web forums.

The principle of stock spam is working like this: Someone takes an arbitrary stock, best a cheap penny stock, and begins to collect many shares as cheap as possible. Gladly stocks are taken in which there was no significant movement for months.

If that someone has finally collected enough shares of this stock, the stock spam can begin: masses of e-mails will be sent or masses of posts in forums all over the world will be created in which the stock spamer writes, that he has insider information about the stock, that the stock is a hot tip, the company will come out with an unexpected profit expectations soon or whatever.

All of this has the purpose to animate as many people as possible to enter into the share. But the only beneficiary of this affair will be the stock spammer himself. Because, shortly after the stock begins to rise because of all people going into the stock, he will start to sell all of his cheap shares for inflated prices. And he makes the profit.

Shortly after that, usually the fun and the rise is over and the stock disappears from the scene. What remains is a bunch of disappointed investors who bought the shares far too overpriced and probably will never get rid of the shares again.

By the way, stock spam is forbidden by law and can be prosecuted.
2012-07-27 at 15:47