Ruettiger’s scam feeds into this third one:
unscrupulous investors who try to inflate a microcap’s price so they can dump shares at the top and make a fortune — right before the price crashes again.
This is most easily achieved in microcaps with thin volume, because it’s easy to move the market with a low-priced stock that trades only a few thousand shares a day
. It’s an increasingly popular tactic — a Trustwave report recently showed that penny stock-touting messages accounted for “16% of unwanted email in 2013, up from less than 1% the year before,” according to MarketWatch.
You can protect yourself by looking for more liquid stocks that trade on higher volume, and even then, it’s a good idea to use a limit order to prevent buying shares at a higher price than you expected.
- having or showing no moral principles; not honest or fair.
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