Pump and dumps have been going on since the beginning of the stock market and are most prevalent amongst penny stocks. The hard mailer is one of the most used avenues to pump a stock. The company themselves, affiliates, or large shareholders pay millions of dollars to mail out glossy 20 page reports trying to dupe investors into buying the underlying stock so they can sell their positions or conduct a financing. Just like gravity, when a hard mailer pushes a stock up, the buying eventually ends and they always crash back down to Earth.
It has been several months since I’ve updated my Pump and Dump Performance matrix. Since we are so close to Christmas, just be thankful that Santa didn’t give you this bag of coal 🙂
Here is a performance matrix of every hard mailer I’ve received at my home over the past few years. As you will see, time is a pump and dumps worst enemy. Over time, most of the companies that are mentioned in hard mailers lose most of their value. Some even go to zero.
Many hard mailers look like this one below, which I received on December 17th on Falconridge Oil Technologies (FROT). You will see the cover page and the compensation disclaimer.
It’s unfortunate that in many cases an investors first entre into the microcap space is from unscrupulous sources such as a hard mailer or some pump and dump website. It’s important for investors to know that only a small percentage of microcaps indulge in such unethical tactics. Many microcaps have great businesses, management teams, share structures, and conduct themselves with integrity.
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