There are thousands of ways companies can make prices of their stocks rise pretty fast. In January for example, there was speculation that Samsung was interested in buying Blackberry. Following the publication of the false news report by Reuters, Blackberry's stock shot up [by] 30%. Later when Samsung declared that they no plans of buying the Canadian company, the value of Blackberry's stock plummeted once again. Lesson learned from this? Don't trust all the news you read because they could lead you to make bad investment choices and you'll end up losing a lot of money.
It's a classic "pump and dump" strategy. Buy a beaten down stock, start spreading random and unsubstantiated rumors, watch the share price rise sharply, you sell the shares, and wait for the rumor to be completely denied, watch the share price collapse back to where it was... It's the sort of thing you see in penny stocks. Not very healthy behavior.
Got that Rainman...and noted down!...i guess when i start investing in the stock market, i will hire someone in a brokerage firm to do the messier work for me...the stress of handling all that by myself will destroy me and i can't handle that..a brokerage firm is the way to go
Honestly, if you follow BlackBerry, they essentially get a yearly or bi-yearly rumor of a buy out. Usually it was Lenovo though, but I can see how they leaned it towards Samsung this time. Truthfully, I think these rumors are fantastic IF you're invested in the stock before they occur -- I'd sell on it immediately. Especially considering how often BlackBerry tends to rise and fall as a stock over the past few quarters.
GUILTY!!! I am one of those who followed a rumor about a banking company that it is investing in so.. and doing that.. and involved in these.. etc. I invested some of my hard earned money to this company as rumors going around makes it look good. It is too late that I realized that they are just sending out good marketing and press releases to encourage and entice new investors (like me) to divert my money to them.. and then.. kaboom! the stock price devaluation goes down to up to 50%.. shocking! and I learned a lesson well, the hard way.
I mentioned the other day when it happened that the spike in blackberry before the bell on the takeover rumor was a great time to sell.
I suppose then these rumors can work to the advantage of investors. They sell, earn some profit fast and when the value of the stocks plummet those who rushed in to buy may consider selling before they lose more of their money. And the investors pounce on that and wait for the next victims. Can be quite profitable especially if these spikes are a regular thing.
Buy on the rumor, sell on the news. If you are hearing something about an individual company on the news, even CNBC, then it is too late to make money on that news. If you want to invest that way, invest into the rumors, and then sell once it is announced.. but that is always a gamble because the rumor may not be true.
Everyone has a rumor, every good broker has a pony to bet on and every good investor plays the odds. I think those are pretty simple things and those are the things that make you money. I'm not sure what the point is when you make some of the big sale decisions or what money you're happy with, but remember rumors brings good things and bad things alike, but be ready for the ebb and flow. As a relatively new investor, I'm learning this every day.
Interesting advice. What if the rumors raise the prices and then once the news debunks it, the price plummets??