Fire Your Stock Analyst!: Analyzing Stocks on Your Own

Chapter 19. Detecting Scams, Frauds, and Pump & Dump

I don’t know about you, but I get daily email from people I don’t know advising me to buy stocks that I’ve never heard of. These missives read like research reports from professional stock market analysts profiling companies that have just developed exciting new products or services with huge market potential.

I know that these stock-hyping emails work, because occasionally I check the touted stock’s trading volume. Typically, the number of shares traded daily jumps by a factor of four or so, for days after the email.

Back in November 2001, I received a particularly enticing report from a “new financial service” that said it was “striving to find investment opportunities.” I’ll call this helpful ...