SNPK: What Happened And What Next?

Update: I'm declaring SNPK a worthless buy once again. It would make a good short but there have never been shares available to short this whole pump and I see no reason to expect them to become available. Looking forward to the next pump.

Original Post: -----

If you're reading this post, chances are you lost money and are searching for some reason as to why your investment went bad. First off, I'm sorry for your loss. Hopefully I can help prevent such a loss from happening in the future.

What Happened?

To understand this, we need some background. SNPK was being promoted by a group of promoters that are paid to artificially inflate the stock price up. If you found SNPK through some sort of advertisement or email, these are the people who are inflating the price. The promoters job is to generate hype around the stock, sending out thousands of emails a day, telling people how great the stock is. Presumably you were one of those people who was fooled into believing the emails and their $9 price target.

Promoters can also use other tools of varying legality in order to make their featured stock gain in price. Often times it seems as though certain market makers will have a hand in the promotion by putting in huge bids to support the price at unnatural levels. When people see that support, they buy and the price moves up. The artificial support moves up and the cycle then continues until the price is way higher than it deserves to be.

Why would people promote a stock just to crash it later? It's usually unclear who actually paid the promoters and frankly it doesn't really matter. You can usually check the bottom of all emails for a disclaimer to discover an idea of who paid and how much they paid. Here is an example disclaimer from the latest SNPK email:

Check out that last paragraph. This particular promoter group was paid $50,000 dollars to send you an email reassuring you that SNPK will recover. Wouldn't you say that makes them rather biased? Also if the stock crashed 50+% while they were saying how great it is, you probably shouldn't trust anything they say anymore.

Also, the promoters are composed of a vast number of sister sites/organizations so that they can split up the amount of money they have been compensated, thus making them look less biased. I don't remember the exact amount that APS/CrazyPenny was compensated for pumping SNPK but is somewhere around 1 million dollars.

If you are still wondering why people would be evil enough to inflate a stock and then drop it so that normal people like yourself end up losing lots of money, the motivation is the same as many other evil acts: money. Imagine you have a large sum of money and you want to make lots more money with no regard for morality or your fellow human beings. So you buy a million dollars worth of SNPK at 0.28, then spend another million dollars on the promotion. You then sell your million dollars worth of shares at 2.30 just before the drop to make a profit of around 7 million. This is the sort of strategy that fuels the immoral promotional campaigns.

What Now?

Unfortunately, if you've just discovered your loss and are wondering if you should sell and take your losses or wait in the hope that it will rebound as the emails promise (the same emails that originally tricked you), I am going to have to suggest that you sell. Based on previous promotions, there is some possibility of a bounce, but even then it probably won't be by much. The greater chance is that the price will drop even more and over the next month or two, SNPK will be trending down to below 28 cents per share.

I Want My Money Back

Hopefully I can offer some guidance for how to profit from these kind of crashes rather than falling victim to their dishonesty. The key to this is shorting. If you're reading this, you probably don't understand shorting and/or have heard terrible things about it. The truth is, that shorting is just like regular trading but with the opposite goal. Thus, when a stock crashes hard, you make money. Due to the large amount of misinformation about short selling, I invite you to do several google searches about it before coming to a conclusion. Some people even say that it is illegal but that is false. If you'd like to start identifying sketchy stocks and make money from them, I suggest you check out all that profit.ly and friends has to offer.

Coping with the current loss

Big losses are devastating to your confidence both in and outside of the stock market. You don't want to make the same mistake again and next time you want to know how to make money from these sorts of events rather than losing. Hopefully I can help you with these goals.

The important thing to do is to take a break from trading. You will naturally want to regain your losses and it is likely that you will end up making trades with poor risk/reward ratios while trying to do so. By doing this, you will only make things worse and end up losing even more money. Come back to trading when you've calmed down and had a chance to relax. If you trade with the mindset of "I need to make this money," then you're probably going to trade poorly.