The Anatomy of Pump n' Dump Stock Spamming

giorgiofr writes "Laura Frieder and Jonathan Zittrain have analyzed pump n' dump spam activity in their paper 'Spam Works: Evidence from Stock Touts and Corresponding Market Activity'. Unbelievably, it appears that spammers are able to achieve a 5% gain on pumped stock before dumping it, along with a dramatic increase in transaction volume of the stock. From the synopsis: ' We suggest that the effectiveness of spammed stock touting calls into question prevailing models of securities regulation that rely principally on the proper labeling of information and disclosure of conflicts of interest to protect consumers, and we propose several regulatory and industry interventions. Based on a large sample of touted stocks listed on the Pink Sheets quotation system, we find that stocks experience a significantly positive return on days prior to heavy touting via spam. Volume of trading responds positively and significantly to heavy touting.'"

Comments

Re:Invest in spam-filter companies ;)

[Profane MuthaFucka]

Your signature indicates your ears are closed by I'll give it a shot anyway.

What do you mean by that? Is this some kind of stereotype or something?

It is the sharp, 10%+ shifts that happen in the market that hurt the small investor.

Actually the perception that the game is rigged is what hurts the small investor by making him distrust the market.

Everybody can see that's true, except for you, because you eat a WHOLE lotta cock. I won't let your homosexuality color my perception of you however. We all know what Braynard is a code word for. Scrotums.