Spam messages that tout stocks and shares can have real effects on the markets, a study suggests.
E-mails typically promote penny shares in the hope of convincing people to buy into a company to raise its price.
People who respond to the “pump and dump” scam can lose 8% of their investment in two days.
Conversely, the spammers who buy low-priced stock before sending the e-mails, typically see a return of between 4.9% and 6% when they sell.
The study recently published on the Social Science Research Network say their conclusions prove the hypothesis that spammers “buy low and spam high”.
I really wish I better understood the mentality of people who fall for this sort of thing. The only way spam can be a profitable business model is if there’s a pool of people who respond to them regularly. I hope some day to meet one of these people so I can ask them about their experience and maybe understand it all a little better.