Thread by @FunduInvestor

Pump & Dump - It is an operation carried by operators - can be done on both quality & non quality stocks

It's like giving steroids to underaged to become mature early !!

Most likely candidate for this operation r stocks with
1. Bad fundamentals/Debt
2. Illiquid equity
3. Story

When questioned, Operator's modus operandi

1. Block
2. Show some hypothetical story or future story
3. Let loose some minions singing praises
4. Show their names as the one's invested
5. "Buy button lies with person buying"

Why do Retail investors fall for it

1. Operator says, made 150 times in 8 years
2. People ask how - "no what's past is past" or show some fluke
3. Hit's the subconscious with statements - "Retired from rat race" or "Financially independent" - everyone's goal, bound to attract

4. Make statement like see in 2022 or 2025, this is the one which will make u financially independent
5. Minions now start spreading on whatsapp - u see 10 people with large following saying about a stock, u r bound to get attracted.

6. Retail's little experience in mkt hence they are unable to analyse business cycles, market discounting, expectations already built into price.

They get trapped at higher price. It does not matter whether the stocks is good or bad, bad price for a good stock will also hurt

One needs to understand, these operators are brilliant people with amazing perseverance

They are highly experienced in market, hence knows the nerve of what will tick
They have amazing understanding of psychology to hit your innate desire
Great storytellers, very creative people

Why do stock gets dumped?

Money required to move stocks when it has doubled or tripled is 2 or 3 times initial amount. Higher stock goes, higher the amount of money
Ran ahead of their fundamentals
Operators go missing when they realize risk reward not favourable to push further

Sometimes, these operators quote great investors, sometimes they make their own sayings !!

Remember these are all traps, u know things but never realize until it was said. That's why saying creative people

Even The Most Intelligent Investors Succumb To Human Frailty – Including Ben Graham

acquirersmultiple.com/2017/09/even-t…

Greed & optimism repeatedly leads people to pay elevated prices for stocks in vogue & hold after they have become highly priced in hope of further appreciation

Hindsight shows everyone what went wrong: that expectations were unrealistic and risks were ignored - Howard Marks

In hot markets, people worry about missing out, not about losing money, and time-consuming, skeptical analysis becomes the province of old fogeys - Howard Marks

Psychological and technical factors can swamp fundamentals. In the short run, markets are highly responsive to investor psychology and the technical factors that influence the supply and demand for assets

- Howard Marks

Sometimes they do this - emotional, happy ending message !!