Mar

4

 Dear Laurel and Victor,

I wanted to thank you both for your inspiration and detailed analysis through your website and books. I am the proud owner of The Education of a Speculator, Practical Speculation, and Fifty Years on Wall Street. Victor's teachings have taught me to look at markets from a different viewpoint. His views on capital markets are unprecedented and his lessons are invaluable. For that I thank you both.

I currently am 26 year old, full time trader and researcher. I have been working on a piece (see attached) after observing the fallacy of trading euphoria as I call it. I know I may not be as experienced as some of the other contributors to the site but I'm hoping that you may find the article informative at the least and worthy of a post on the website. If not no worries, thank you again for your time and consideration.

Keep up the great work.

Sincerely,

Brian Cauthen

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The Art of the Pump by Brian Cauthen

I had the privilege of watching the $CBMX "pump and dump" on Thursday afternoon. Within one day this stock rose from $2.86 to a high of $7.64 off nothing more than hype from a simple news article.

Although some variables tend to differ, the majority of pumped stocks over the years have similar basic characteristics.

A Pumped stock churns higher at obscene fundamental levels with high spreads and no predictability in a short span of time.

Within minutes manipulation swarms social media fueled with frauds and pumpers talking about long term valuation and balance sheet statistics of the pump.

PR's, blogs, insiders and online "trade rooms" help promote the stocks as they advance and squeeze, catching initial shorts by the pants.

All at once the rug is pulled, sending longs into a panic dumping shares. The insiders and front runners are way out by now. We may see an additional attempt to regain footing back to highs but that is usually overtaken by hesitant longs begging to get out due to new uncertainty.

Social media ramps back up with gurus claiming how they mentioned the high and are now short the stock catching easy gains. The bag holders are screwed losing large amounts of cash, vowing to never get fooled again.

The SEC charges the PR firm and insiders with fraud. The parties admit no wrong doing and settle for fractions of the profits made off the pump.

Wash, rinse, repeat.

Some of the most notable pumps of all time include $LEXG(April 2011) $BVSN ( March 2012) and $ROSG (August 2011 and May 2012).

Deceit and promotion for self advancement at the expense of others is nothing new on the Street. The part that worries me is that it's becoming the norm.

By the close Friday afternoon $CBMX was trading at $5.27, down 30% from the highs.


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