Beware of mystery callers bearing hot stock tips

Reality Check

Your Money

December 19, 2004|By Lorene Yue

It's a tantalizing trap.

You check your answering machine and hear a message that's intended for someone else, obviously a wrong number. But as you continue listening your heart skips a beat as you realize the caller is passing along a hot stock tip gleaned from an insider.

The caller has news of a big announcement coming down the pike that is sure to lift a certain company's stock price.

Before you rush out and buy shares of the company being touted, think of two words: "pump" and "dump." The caller is likely part of a group artificially pumping up the price of a stock so they can dump their shares at a profit.

The company mentioned is usually a little-known legitimate outfit. When the con artists stop pumping and start dumping, the price falls, and you're left with a stock worth less than what you paid for it.

- Lorene Yue, Your Money

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