Aside from learning the good side of earning in stocks through appreciation and dividends let me also show you the other side or the other picture when you enter the world of the stock market.
Surely you have heard this already, if not go on and watch "Boiler Room(2000)" and "Wolf of Wall Street (2013)" and be entertained with the pump and dump system portrayed in both movies.
What do we mean by pump and dump, basically it's just one example of "stock manipulation" where they try to boost the price of a certain stock spreading false news or hypes and reco's luring other traders or investors to jump on the bandwagon.
When we say hype, we mean exaggerated promotions that a certain stock price will rise soon without valid catalysts/fundamentals to backup their claims. When you say PUMP, literally it means to inflate or increase or raise something like liquid or gas which can be related to the stock market where perpetrators who promote these hypes to a particular stock just to push its price higher.
More or less once a certain stock shows some irregularities with the sudden price increase from the normal trading price without any catalyst then most likely this stock is being "hyped" for the pump and dump scheme.
In short the "pump and dump" scheme is ILLEGAL and must not be tolerated or supported by every trader or investor, it would still be nice to play fair and square, unless you want to go against the Republic Act 8799 Chapter VII Section 24 (Read here).
The PSE is not exempted from this scheme, and is not limited to IPO's, penny stocks or any stocks. Take note stock manipulation is not only about trying to push the price higher but also pushing prices down and if my memory is right one particular bluechip that was fundamentally sound before and with the PSE index hitting as high as 8k+ level failed to move at a higher price per share.
Going back with the "pump and dump" scheme, once there are no longer buyers reaching its maximum ceiling price, then they start to DUMP their shares leaving those who bought at the top clueless after a sudden drop in price after the huge volume being sold.
Going back with the "pump and dump" scheme, once there are no longer buyers reaching its maximum ceiling price, then they start to DUMP their shares leaving those who bought at the top clueless after a sudden drop in price after the huge volume being sold.
You end up holding "basura" stocks with less value in the end if caught up with these stock manipulators.
Cases of some manipulation in the country can be traced back with the case of BWGE (Best World Gaming and Entertainment Corporation) formed by Dante Tan in 1998 where it price starts from ₱0.80 up to ₱145 while other reports from merely ₱2.00 to ₱107 in almost a year (1999). You may check for full story from here .
Whereas another case filed by SEC after finding some evidence of manipulation to those involved from Calata stocks in 2012 which during its IPO offering price of ₱7.50 of May and went up as high to ₱23.95 early of June. You may check for full story from here .
Be cautious and be skeptical if you hear some reco's from other groups, you don't want to be holding unworthy stocks and might hurt your portfolio.
Manipulation can be done by an individual with great influence either with political connections or like what happened with Calata stock a combination of "painting the tape" and "pump(hype) and dump".
Never disregard the big players/institutions with huge amount of buying power and reserves that they can easily play around with the market that once they start to accumulate huge volumes of shares, small traders/investors also known as retail investors/individuals are easily drawn and once the big players/institutions dump, small players are always left behind.
If you also want to add to your knowledge on cross trades you may read details here.
Sample article that discuss such manipulation exist, read here.
Know more about institutions on how they play a key role in the stock market that you should take note of, read here.
If you find this helpful, say thanks by sharing this site to others!
Cases of some manipulation in the country can be traced back with the case of BWGE (Best World Gaming and Entertainment Corporation) formed by Dante Tan in 1998 where it price starts from ₱0.80 up to ₱145 while other reports from merely ₱2.00 to ₱107 in almost a year (1999). You may check for full story from here .
Whereas another case filed by SEC after finding some evidence of manipulation to those involved from Calata stocks in 2012 which during its IPO offering price of ₱7.50 of May and went up as high to ₱23.95 early of June. You may check for full story from here .
Be cautious and be skeptical if you hear some reco's from other groups, you don't want to be holding unworthy stocks and might hurt your portfolio.
Never disregard the big players/institutions with huge amount of buying power and reserves that they can easily play around with the market that once they start to accumulate huge volumes of shares, small traders/investors also known as retail investors/individuals are easily drawn and once the big players/institutions dump, small players are always left behind.
If you also want to add to your knowledge on cross trades you may read details here.
Sample article that discuss such manipulation exist, read here.
Know more about institutions on how they play a key role in the stock market that you should take note of, read here.
If you find this helpful, say thanks by sharing this site to others!
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