Why is it that after the hype is over the stock starts to fall in a "Pump and Dump" scheme? In other words, why is there a "dump" part of the "Pump and Dump?"
The whole point of the scam is to get people excited about the stock. It has been said that the stock market is 80% psychology and 20% actual economics. I am in no position to comment on this nor will I make the attempt. However, it is a basic fact of advertising that the more "buzz" there is about a stock (or really just about anything), the more people will be interested in it.
The "Pump" part of the whole scheme, therefore, is to get as many people as possible interested in the stock. The more people interested, the better. Once the "Dump" part of this whole thing begins, people lose interest in the stock. Since the stock was never really a good investment anyway, once the hype dies down, there is nothing really there.
The whole point of the scam is to get people excited about the stock. It has been said that the stock market is 80% psychology and 20% actual economics. I am in no position to comment on this nor will I make the attempt. However, it is a basic fact of advertising that the more "buzz" there is about a stock (or really just about anything), the more people will be interested in it.
The "Pump" part of the whole scheme, therefore, is to get as many people as possible interested in the stock. The more people interested, the better. Once the "Dump" part of this whole thing begins, people lose interest in the stock. Since the stock was never really a good investment anyway, once the hype dies down, there is nothing really there.
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tausk
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