Just call us Bond. Amortized bond.
Over 700 finance terms, Shmooped to perfection.
A scam that can get you in a lot of hot water—if you're caught.
This scheme requires at least two people: one of you sells a stock or security at an agreed-upon price, and the other buys at an agreed-upon price. Then you switch, so that the stock exchanges hands between you—again and again. Lots of trading happens but no one loses money.
The goal is to make other investors (those suckers) think that there's lots of interest in a stock, which will hopefully cause people to buy. That in turn drives the price up, and in the end, you and your co-schemer have stock that's worth more. You can then sell the stock for real to someone else at the inflated price and keep the profit.
You can also go to jail, so choose wisely.