Hi there, what is your view on pump and dump, is it a fair practise? Or a Scam?
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Hi there, what is your view on pump and dump, is it a fair practise? Or a Scam?
Clearly high risk market manipulation that will cost lots of people money that try to time their buys/sells badly, getting in too late, getting out too late, trying to buy stocks that don’t get enough volume behind them, caught up with trading halts due to ‘irregular’ market activity, more suspensions.
It’s not trading, it’s more akin to gambling.
I would read this, it’s very informative and sums up how the markets work in an extreme scenario of what your talking about.
It is considered as a scam technique to defraud investors.
It used to be a common practice on Wall Street up to the 90s’ I believe, but was banned as a practice as big banks were just emptying Investors’ pockets.
Roughly, any group of investors privately colluding in order to induce a crowd to buy into an asset they control a large chunk of the supply was declared as a pump and dump, and is sanctionable with jail time.
Since, the practice has not disappeared; it kept being very common, but with penny stocks more often, in early 2000s and 10s’ it was the #1 source of spam emails, to present you with this amazing opportunity.
Since 2014 or so, with the explosion of cryptocurrencies altcoins and shitcoins, you can imagine it creates a huge unregulated black market (whilst unregulated, the practice is still illegal).
But very sadly younger and younger investors have somehow legitimised the practice, believing that a pump and dump is a sort of hype gamble, as long as you get in “early enough”.
The reality of it, when you hear about such a scheme, even as a “private group for ground floor members”, the coins/securities you are buying are being sold by the organizers already. They already accumulated long before. They are profiting already from you, emptying your pocket.
And where would reside one’s ethic, buying into such a scheme “on the ground floor”, when he knows very well that his only way of making money is being earlier than the next investor who will lose money. It is not a gamble, it is a way of defrauding your fellow humans 🤷
Hope this helps
Do you think that , moral compass and ethic really exist on trade markets? After all ,one way or another ,We are all there to make money at all costs!!
That is a valid remark, but there is a difference between investing in a productive asset, which create value and utility to society, and being rewarding for it, and defrauding your fellow investors.
P&D is about trying to sell a bag of ■■■■ to somebody else while not getting the bigger fool yourself. There is no regards for the underlying fundamentals of whatever you’re “investing” in, only defrauding people.
Buying long or selling short, heck even to some extent derivatives markets (derivatives can get used in a poor way fuelling systemic risks, so i have to put them on the side here), all are bets on an underlying real situation.
P&D are not; and therefore have been ruled illegal.
I’m touching a slightly different subject, but there is still insider dealing and so on going on in the markets. Unfortunately whilst everyone likes to make a quick buck, and although its discouraged through regulation/penalties, I doubt it will ever be eradicated.
In my opinion Market manipulation by Derivative trading, Pump and Dump, lent out loans and shares and naked short selling are very damaging for every stock market and they need to be eradicated for a fairer and ethic trading.
Oh, good to know you weren’t asking about anybody’s opinion all along, just trying to push your own further, without ever listening.
It’s been 2 topics now that you try the same thing.
I wish you well, but this is goodbye.
I would have to disagree, you are taking a very one sided view on Share lending and not considering all the upsides it has.
Please remember that the Derivative trading, lent out loans and fake gradings, caused the market crash in 2008
Are you sure it wasn’t the mis selling of toxic sub prime mortgages?
And that too, all the loans
I guess we have to agree to disagree on some topics
Thank you for participating gentlemen, have a good day
Is it fair to say that , all traders (Retail, HFs, Institutions, Indexes, Stock markets, Companies) have the same objective, to finish the day in GREEN and generate a healthy revenues for themselves. To achieve that, they won’t hesitate to use some of the tools that have been mentioned in this discussion earlier on, this is my conclusion.
Thank you again
that is not a conclusion, that is ego and hypocrisy. again you aren’t having a discussion, you are asking a question then telling people what the “correct” view is. there’s no point in telling people “thanks for participating and have a good day” as if the topic is now closed and people cannot continue to respond.
the market exists at its current scale and the economy functions as it does because of derivatives, underlying assets and frequent practices of price discovery which is supported by those who hold short positions just as much as those who are long.
without all the different entities and derivatives, the stock market would still remain a very exclusive opportunity for a few wealthy old men in suits, with no way for the general retail investor to get a foot in the door or to try improve their lot in life. in turn the economy would remain as it was decades ago with no major conveniences like the giants of google, facebook, apple, microsoft etc to power your daily lifestyle.
companies can get loans for their operations on the basis of how their stock is performing, this can be abused by dodgy management which is why it’s important the price is not allowed to balloon out of control. companies can benefit from their price increasing or decreasing, depending on what it is they are trying to do.
Traders aim to make a profit, but they are not so delusional as to think they can always make one. they often have to accept eating a loss to try again with another position when they see another opportunity arise.
what is illegal is illegal, so traders DONT do it, as simple as that. certainly not as a sweeping generalisation like you suggest.
your so called ‘ethics’ are yours alone. for many trading is a way to put food on the table and the amount of money that changes hands stays in a very modest low-risk range. most people trade long and only short as a way to hedge their position to reduce risk and loss when the market goes against them unexpectedly. a combination of long and short can allow a trader to lock in a rather fixed % of gain/loss for any given security as they don’t want to chance a 30% gain if they could end up eating a 60% loss. the same holds true for those managing vast sums of money, they have an obligation to the people who trusted them with their money not to risk it unnecessarily and to return them a profit as interest for allowing them to borrow it.
the 2008 crash was not ‘caused’ by short sellers or traders, if the security was sound there wouldn’t have been a crash. it was caused by dodgy dealing in faulty mortgage backed securities by the banks, everyone else was too hyped on the market and led to believe that the price could only go up causing the situation to get worse, not out of malice or “poor ethics” but ignorance and greed.
those who went through all the work of researching what was happening and saw how bad the situation was got banks to provide short positions as a means of highlighting the scale of the issue, yet it was ignored and so they went to providing security for themselves and people who invested their money with them, those that were at risk of losing their entire livelihood when things would inevitably go bottoms up.
it’s easy to lump them together, but I am wondering if you can tell how each of those differ from the other?
I would advise you to stick to keeping your money in a savings account, but I would have to explain that the reason you get interest is because the bank uses your money in the market, loaning it to other customers just as your shares are loaned out without your input. so I guess you don’t have a bank account since you want to keep hold of everything you own exclusively? same for a pension, since that’s run by an institution and a large portion of pension funds will also be shorting positions to reduce volatility in the money that you will later attempt to retire with…
in fact, with how you have distinguished the majority of the stock market as ‘lacking ethics’, I am struggling to figure out why you are here, considering your views on the subject?? you can’t be so against these practices but still use and benefit from the services that utilise them without portraying yourself a hypocrite.
Huh? - I would read this:
Starlings pretty good from what I have heard. don’t have an account with them myself.
loans, credit, government support and while separate, the fee’s from such support their market activity as I recognise it. to be against the use of shorts while holding a bank account, you would need to be convinced the bank you chose doesn’t take part in the market at all. to use a service is to support all its actions, but I can stick to just referencing pensions if you prefer.
to keep accurate with the link you shared, I suppose I should instead reference that your bank balance is loaned out to others in the same way your stock shares are loaned out?
This makes me think it’s a parody?
If your interested there is a secondary market now on crowdcube to invest directly, but I prefer liquidity so I hold it indirectly through CHRY, but I believe it’s trading at a 10% premium. The other holdings are decent too and the managers have a good track record.
Bank wise as well, the drop on bank taxes although people think is a ‘bad’ idea, is actually genius. The UK government still holds large stakes in some UK banks, so it is in everyone’s interests for these banks to be more profitable and the share prices to rise. This will also help Starling.