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Originally Posted by RichieGB
Dear KATG,
The price of a stock is related to the demand for that stock. If a lot of people are trying to buy it in a short amount of time, the price soars quickly.
The "buy this stock" e-mail spam works like this: The spammer finds a cheap worthless stock that is publicly traded, maybe costing a penny per share. He buys a LOT of it and then sends a spam mail promoting it. If enough suckers decide to go through their broker and buy it, the price of the stock is driven up. Once the price goes up the scammer sells all of his shares at a profit, the price falls, and Keith is left with stock that is worth less than what he paid for it.
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It's called price pumping, and the Securities & Exchange Commission looks out for this sort of thing. If you get nailed doing this, it's white collar, pound-me-in-the-ass, tennis resort prison for you.