September 23, 2007
I visit the finance message boards occasionally at Yahoo to see what people are talking about. I do it just for kicks rather than for investment advice, so it was interesting to see some posts about people buying and selling "momo" sticks and getting burned. One of the top Nasdaq stocks on Friday was a company called "Handheld Entertainment" (Nasdaq ZVUE) and so I checked out the board. As usual, many people were bragging about how much money they made trading Handheld Entertainment which was to be expected since the stock had gone up 55% on Friday. However, I saw a post entitled "i lost $20K on ZVUE - why ZVUE is pump and dump". The title of the post could also have been "How to invest Never to Retire" because it talks about an investor who bought ZVUE when it ran up to $7 last time the stock made a mysterious rise. Apparently, the poster sold it at under $2 before it mysteriously ran up again on Friday. I bet he must be pissed. I would be if I were him. It's a sobering lesson that there are many ways to invest, but that investing in momentum stocks is a sure way to the poor house - for everyone but the pump and dumper. There is an interesting reader comment from last week about ZVUE. The reader noticed that "they" started a spam campaign on Thursday right before Friday's big rise.
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