These schemes are pretty basic: someone hypes up a company’s stock using false or misleading statements. (Think about a “stock cheerleader.”) Once they “pump” up the stock they sell their cheap stock and make a whopping profit.

You can see these on TV shows, websites, and even hear them over the phone. Telemarketers will call using a “buy quickly” pitch.

The stock pumper will often claim to have inside information. Or, they have some sort of never fail way to pick stocks. They usually have some convoluted combination of “figuring out” what’s going to be the next big stock pick.

Often these are either paid promoters (think late night infomercials) or even company insiders. Once they sell, or “dump,” their stocks, they stop hyping it, the price then falls, and the investors lose money.

Whenever you’re looking to buy stock do your own independent research—into the stocks, the companies, and the people giving the tips.

Want to practice investing in a safe environment? Try the Young Money Stock Market Game. It’s free to join. Enter one of our contests and you’ll be eligible to win real cash. It’s a great way to learn how to play the stock market while having fun.