You can still lose money during bull runs if you fall for this trap…

Today, I will tackle bull runs, and how investors can still lose money when every corner of the market is firing on all cylinders.

Eager to know more?

Keep reading below!

You can still lose money during bull runs if you fall for this trap…

This person, who runs an executive coaching business in London, thought she had a safe bet… until her savings got wiped out.

Earlier this year, this executive coach chanced upon a  Facebook  ad that led her to join a  WhatsApp  group filled with other investors.

In the chat room, she and the other members were encouraged to put money in a microcap stock called  Ostin Technology. The coach thought she was in the company of legitimate investors, so she followed their lead.

Unfortunately, what was thought of as a safe bet turned out to be a money-losing stock when Ostin Technology’s shares cratered by 94% in one day. The executive coach ended up losing her entire savings and described it as having  “the rug pulled from under my feet.”

The story of this executive coach is far from unique, though.

In July 2025, seven Nasdaq-listed microcaps—which include Ostin Technology—dropped by more than 80%, erasing USD 3.7 billion in total market value. 

Just like Ostin Technology, these stocks were heavily promoted to investors in WhatsApp groups and other social media platforms prior to the sell-offs.

That’s why today, we’ll talk about the return of pump-and-dump schemes in a surging market and how investors can protect themselves from these nefarious tactics.

Dirty Tricks Thrive when Investor Sentiment is High

Even though the S&P 500 Index is up significantly in 2025, a lot of people have missed out on massive gains.

According to  Professor Joel Litman , Chairman and CEO of  Valens Research  and Chief Investment Officer of  Altimetry Financial Research, and his team, the Russell 2000 Index—a benchmark for small-cap stocks—is up only about 7%. 

This is partly due to the fact that the index doesn’t include Big Tech winners like  Nvidia. However, something else is also at play.

Based on information from the U.S.  Federal Bureau of Investigation (FBI), there has been a 300% year-over-year increase in complaints related to “ramp-and-dump stock fraud.” Many are tied to Chinese microcaps that went public on U.S. stock exchanges in 2024.

These schemes are often pulled off across social media by malicious actors who pose as legitimate investors offering stocks to unsuspecting victims. As a result of their malicious acts, they’ve wiped out billions of dollars from microcaps.

Despite the proliferation of these schemes, it doesn’t mean you’re defenseless from these nefarious tactics.

When reading up on stocks on social media platforms, watch out for overly positive commentary on a particular stock. 

When Ostin Technology blew up on social media, it was discovered that users on popular social media platform  Reddit  posted positive content about the stock in the span of two hours.

Aside from this, another step you can take is to take a look at a company’s auditor and find out if it has been involved in audit violations. 

Additionally, do some research on a company’s leadership people and see if they have any history of being involved in illegal or unethical activities.

Microcaps can generate outsized gains, fly under Wall Street’s radar, and could even grow faster than large caps.

However, those are the exact same reasons why they’re among the easiest targets for manipulation.

That said, by conducting some research of your own, you can reduce the chances of falling for pump-and-dump schemes and microcaps that hide a lot of downside risk.

Hope you’ve found this week’s insights interesting and helpful.

Stay tuned for next Wednesday’s The Independent Investor!

At first, this company was laughed at—mocked, dismissed, and written off as a passing fad, even.

Learn more about  this “ugly” and “uncool” footwear brand’s 870% upside  in next week’s article!