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How does "pump and dump" work?

Answers

Grudun answered a question in General Market.
951 points

Grudun answered one year ago …

Someone buys a chunk of a cheap stock, then they do their best to generate interest through advertisments, posts to stock boards or just word of mouth. One enough other people are buying the stock it starts going up, then when it gets high enough they sell their whole chunk of stock for a profit. Then all efforts to generate interest are stopped and the people who bought in realize they have overpayed for a cheap stock that has dropped significantly when the initial buyer sold their stock.

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