So a lot of people ask we what is a pump and dump? Why should we get involved in penny stocks?
I thought they’re all pump and dumps I’ve seen the movie The Wolf of Wall Street. Nothing good is happening with these penny stocks. I’d agree, nothing good is happening with the Wolf of Wall Street. He’s a career criminal. I would stay away from him unless you wanna learn how to be a criminal or I guess if you want drug connections, he probably has that too.
For me, I want to actually utilize all different kinds of companies and stocks in the stock market to get me richer. And for whatever reason, pump and dumps and penny stocks have worked the best for me and my top millionaire students. I didn’t choose penny stocks. Penny stocks chose me. I didn’t have a lot of money to begin with, so penny stocks are very affordable. These are stocks under $5 a share. A pump and dump is not always going to be a penny stock and vice versa. A penny stock is not always gonna be a pump and dump, but most stocks under $5 a share are very speculative in nature.
You know, they might have one or two products. They might have some revenues or even no revenues. And when you have that kind of speculative nature, that kind of opens the door to pumping and dumping. What is pumping and dumping? It’s when someone basically lies about a company or technology or stock and pumps it up. And they say oh, like maybe this company has no money, and they say oh, this company just got a billion dollar investment or this company has very few prospects.
Maybe they’ve invested this small penny stock like in The Wolf of Wall Street. Maybe they’ve invested in like a small field, like an oil field in Colombia, and they’ve put in like 20 grand. And then someone pumps it up and says this oil field in Colombia is gonna be a trillion dollar oil find, when it’s obviously not. It’s pumping and lying. And pumping and dumping is actually illegal because if you lie about a company, if you like about its prospects, I mean, that’s fraud.
So whether it’s a broker like the Wolf of Wall Street who’s pumping up just to get the commissions, just to make the trade, or if it’s the company itself and they’re putting out misleading press releases, you can’t just lie.
You can’t just pump up the stock. Good news is what gets traders and investors into a stock. So obviously, if you want your stock price to rise, you’re gonna have to issue good news.
But ideally, the good news is backed up by fact. If you say hey, we’re starting a new technology company. It’s involved in Bitcoin and cryptocurrencies, that’s cool. Say that, but don’t say if you’re a company we just started a new Bitcoin company, and we just signed a deal with Google when there’s no deal with Google.
You cannot lie, and why would companies, why would individuals lie? Because they want their stock price to go up.
They wanna pump up the stock price so that they can dump it. The second part of pump and dump involves the insiders or the brokers
or individuals selling the shares into the artificially inflated stock price. They pumped up the stock with lies, and now they’re taking profits. They’re selling the stock at prices that the stock never deserved to be that. It wouldn’t be without those lies. This is illegal, and this is the problem with most penny stocks that get really hyped up. They’re not up for very long because they’re up for the wrong reasons. They’re up on lies.They’re up on hype. They’re up on manipulation. They’re up on exaggerations.
Now, what is a pump and dump versus what is not is very difficult to tell. Sometimes you might think that a company looks very legit, and then in background there’s some boiler room in Malaysia that’s actually pumping the stock up. Why is a stock, a penny stock up 12 days in a row? Because some boiler room has been pumping it up. There’s all kinds of nefarious individuals in penny stocks. That’s why most brokers, most people on Wall Street say stay away. For me, all of this pumping and dumping is very, very predictable. You can see when a company puts out a bullshit press release.
You can see when, you know, online, you can see when there’s a million different Tweets about a company saying how amazing they are or how amazing their technology is when it’s not really that accurate. Companies have to issue SEC filings. So these SEC filings are very long, sometimes 50, 70, 100 pages long. And they’re written by lawyers, so they’re very boring to read, but they issue facts.
So, when a company issues a press release about their little oil field operation in Colombia, and the press release doesn’t mention that they only paid 30,000. The press release is a one page document, and they say guess what, we just invested in this amazing oil field, and they’re all grandiose in the press release. In the 50 page legal filing, they say we invested 30,000. It most likely will fail,but we’re a speculative country, uh, company.
So when you look at the SEC filings, it’s legal black and white. They cannot lie in that. Press releases, boiler rooms, brokers like the Wolf of Wall Street, they lie. So for me, it’s very easy to look at SEC filings versus hype. And that is where the profit opportunity is. I made a lot of money off shorting these pump and dumps just because I know that the reality is not as good as these brokers or pumpers or press releases might say. You can actually bet against these pump and dumps.
That’s where I made literally millions of dollars. Also, if you see at the beginning of a pump and dump that it’s about to be promoted or just got started being promoted, guess what? You can ride the hype for several hours or several days, and you can buy it. I have blog posts where I say look, I invested in this scam, and people say Tim, you’re crazy. But at the bottom of a lot of these promotional mailers, you have to legally put a disclaimer that says we have been paid $2 million to promote this stock.Pumping and dumping is very illegal.
But there’s also legal promotion, where if they put that disclaimer at the bottom of the email, then it is a legal promotion. And theoretically most people are supposed to know that is an advertisement. No one reads the legal disclaimers except people like me. This is where my value comes in. I can help teach you what is a blatant pump and dump if it is a pump and dump. I can tell you with reasonable amount of certainty how long it’s gonna last, and when it’s gonna end, the signs of when it’s gonna start crashing. And that’s when I usually will look to short sell the stock.
Sometimes there are no shares to short, so sometimes I can’t profit. But the whole thing about pump and dumps is that it’s very predictable. They get pumped up, and then once the insiders have sold, they get crushed. If you’ve seen the more technical version of the Wolf of Wall Street called Boiler Room, once the insiders, once the promoters have bought all the stock at very low prices and then sold it at artificially inflated prices, there’s no reason to promote the stocks any more.
So they fall out of bed. They lose 30%, 50%, 100% within a few days. And most people who haven’t studied, most people who aren’t meticulous, they go down with the ship. And they say why is this stock down 50%? There was no bad news. The bad news is that you were too stupid to realize that you were marketed to. You were advertised to. The company’s story is irrelevant. That oil field in Colombia or Venezuela, it’s all bullshit. It’s all just hype to lure you to buy the stock so that the insiders can sell the stock at high prices. You fell for that trap.
And unfortunately, many people find me after they’ve lost all their money. They’ve lost half their money, and they read about my blog post where I try to expose these scams while they’re going on because I try to save people from these marketers and these Wolf of Wall Street Jordan Belfort scum bags who are going straight to hell.
So, this is what I can do. I try to teach you how to avoid penny stocks that are bad, how to short sell them if they’re really bad and predictable, and how to sometimes ride them on the way up, very carefully though, because it’s very scary to invest
in a scam. These tactics are controversial. They’re very highly debated,
If you feel that way, that’s fine. You’ll miss out on opportunities. Nowhere else in the stock market has this kind of predictability because if you’re investing in a big company, you’re trying to guess is the technology gonna make it. Is this company gonna make it. It’s a guessing game. With pump and dumps, it’s not a question of if the company will fail. It’s a question of when.
And there’s very good signs that you can see when it’s about to fall out of bed. So this is what I teach. This is what I do. I know it’s gonna be kind of controversial, but for me, I’m not always right. I win roughly 70, 75% of the time, so I’m wrong roughly 30% of the time.
But at the same time, there are predictable signs. I’ve been doing this for two decades, so I know what a pump and dump is. I know how to avoid them. I know how to legally profit off them by short selling them, and I know how to teach you.