Sunday, August 1

“Pump-and-dump”: the strategy with which influencers deceive small investors in the stock market


  • Drafting
  • BBC World News

Youtuber recording

Caption,

“Pump-and-dump” is a strategy to artificially raise the price of a stock and sell it when the price is high.

The “pump-and-dump”, which in Spanish would be something like “inflar y botar” or “inflar y unchando”, is a simple and very little honest strategy that some “influencers” use to earn money in the stock market.

The mechanism is not complex: I tell you that the price of a share that I bought cheaply is going to rise (pump); I convince you that it is a good idea to invest and that inflates the price; and I sell all my shares (dump).

YouTube, TikTok, Instagram, Reddit, Twitter, Telegram, Facebook … any platform works for those who want to convince you to buy shares in companies with a dubious future.

He who does it, on his own initiative but sometimes even paid by a company, always chooses companies cwith a relatively small market capitalization and cwhose shares are worth almost nothing (known in trading lingo as penny stocks): so there are more unwary who put their money and the rise in the price is more dramatic.


www.bbc.com

Leave a Reply

Your email address will not be published. Required fields are marked *