episode: 28

listen now

About This Episode

Today we’re talking about one of the most common examples of an investment scam, the “pump and dump”, and comparing it with others you may be familiar with, like the Ponzi scheme and corporate fraud.

Investing scams are nothing new. They’ve been around for years and are unlikely to go away anytime soon. While stories of massive schemes seem to make fantastic movies, the reality is that with the unprecedented times we’re living through, many investors are vulnerable and are getting hurt financially after being drawn into schemes and scams that turned out to be too good to be true.

On this episode, Marcelo and I talk about how pump and dump works, the differences between pump and dump and other common schemes, why so many people are attracted to these schemes, how social platforms may be facilitating and evolution of these types of schemes, how you can protect yourself from them, and so much more

Thank you for listening!

Key Topics:

  • Why understanding how pump and dump works is relevant to you (1:29)
  • What does “pump and dump” mean (2:24)
  • The Wolf of Wall Street as a classic example of a pump and dump scheme (3:53)
  • How does pump and dump work in the market (4:52)
  • What was the role of “boiler rooms” in pump and dump schemes in the 90s (5:45)
  • What is a Ponzi scheme? (7:49)
  • Why Ponzi schemes tend to get exposed during bad economic periods (8:31)
  • How corporate fraud affects the market (9:48)
  • Bre-X as a case study of corporate fraud (11:22)
  • Marcelo’s thoughts on how people are drawn into these schemes (13:34)
  • How people are sharing trading information social platforms (14:35)
  • Why this speculative environment is especially dangerous for young investors (15:47)
  • What I learned from a recent conversation with a young investor (16:45)
  • When to be wary about cryptocurrency claims (18:21)
  • The subtle line between ignorance and criminal activity (19:28)
  • How to protect yourself from these schemes (21:02)
  • And much more!

Mentioned in this Episode:

Meet your hosts

Keith Matthews

Keith Matthews

Partner & Portfolio Manager

linkedin  email  phone

Ruben Antoine

Ruben Antoine

Portfolio Manager

linkedin  email  phone

Marcelo Taboada

Marcelo Taboada

Associate Portfolio Manager

linkedin  email  phone

Thanks for Listening!

Be sure to subscribe on AppleGoogleSpotify, or wherever you get your podcasts. And feel free to drop us a line at lawrence@tma-invest.com or 514-695-0096 ext.112

Follow Tulett, Matthews & Associates on social media on LinkedInFacebook, and more!

Follow The Empowered Investor on FacebookLinkedIn, and Instagram

Related Episodes

You Chase – You Lose!
You Chase – You Lose!

Chasing performance is what happens when you see a stock or sector performing well or other investors reaping big rewards so you decide to buy in at the high levels. It’s not at all a new phenomenon as there are always stocks with new and exciting stories inducing the fear of missing out.

read more
War, Conflict & Long-term Investing
War, Conflict & Long-term Investing

In this episode, Marcelo and Keith talk about geopolitical risk/shock in investing. When we’re facing major geopolitical events, war, health crises, or a recession, many investors’ immediate reaction is that we’ve never seen something like this before. We hear – this time is different. Unfortunately, that often leads investors to make short-term, reactive decisions that ultimately harm their long-term investment plan.

read more
2021 Year in Review
2021 Year in Review

In this episode, Keith, Marcelo, and Andrew talk about why we invest, what success looks like, the four quadrants of success, the importance of connection and relationships, the power of gratitude, saving for experiences, and so much more!

read more

© Copyright 2022  |  Tulett, Matthews & Associates        Conflict of Interest Disclosure      Privacy Policy      Legal