How to Lose Money During a Bull Run

Tia Castagno thought she had a safe bet... until her savings got wiped out overnight...

Castagno runs an executive coaching business based in London. Earlier this year, she chanced upon a Facebook ad that led her to a WhatsApp group filled with other investors.

In the chat room, she, alongside others, were encouraged to invest in a microcap stock called Ostin Technology (OST). Castagno thought she was in the company of legitimate investors. So she followed their lead.

But when Ostin's shares crashed by 94% in one day, Castagno lost her entire savings. She described it as having "the rug pulled from under my feet."

Castagno's story is far from unique...

In July this year, seven Nasdaq-listed microcaps – including Ostin – collapsed by more than 80%, erasing $3.7 billion in cumulative market value. These stocks were promoted to investors in WhatsApp groups and other social media platforms prior to the sell-offs.

Today, we'll show why pump-and-dump schemes are resurging in today's hot market... and how investors can protect themselves.

Malicious tactics thrive when investor sentiment is sky-high...

Even though the S&P 500 Index is up 11% this year, a lot of folks have missed out on massive gains.

The Russell 2000 Index – a benchmark for small-cap stocks – is up only about 7%. Part of this is because the index doesn't include Big Tech winners like Nvidia (NVDA). But there's also something else that's taking place.

According to the Federal Bureau of Investigation ("FBI"), there has been a 300% year-over-year increase in complaints tied 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 propagated across social media where malicious actors, posing as legitimate investors, peddle stocks to unsuspecting investors. They've wiped out billions of dollars in value from microcaps.

Now is the time to protect yourself from these large losses...

Predictive analytics firm InvestorLink scours the Internet and the stock market to flag unusual trading.

In fact, its research showed that Ostin Technology blew up on social media site Reddit (RDDT). Twelve users posted positive content about the stock in a two-hour window. Some of those users were tracked back to Russia and Iran.

That type of praise is one warning sign. But there are a lot more folks can look out for at home.

Regular readers know we publish a quarterly "Do Not Buy List" for subscribers as part of our Microcap Confidential advisory. It consists of stocks that have failed our fundamental forensics checklist... meaning we wouldn't touch them with a 10-foot pole.

As part of our checklist, we look for companies working with auditors who have a history of being sanctioned for audit violations... which could signal something is hiding underneath the surface.

Likewise, we review the whole management team for "bad actors" with prior fraud involvement. We even check satellite imaging to make sure the corporate headquarters looks like a business location... rather than a P.O. box or someone's home.

Microcaps can be a gold mine for opportunity. They can grow faster than large caps and often fly under Wall Street's radar.

However, that exact same reason is why they're also among the easiest targets for manipulation.

With a little extra research, you can reduce the odds of picking a microcap stock that has a lot of downside risk.

Regards,

Joel Litman
October 14, 2025

P.S. We updated our quarterly Do Not Buy List earlier this month with the latest stocks you should avoid. Right now, it has more than 50 names on it... from cannabis stocks to pharmaceuticals and "clean energy" car companies. And in the middle of this bull market, you need to be particularly mindful of the companies that make big promises... with little to nothing behind them.

We also put every stock in Microcap Confidential through our fundamentals forensics checklist to maximize our chances of picking big winners. Our latest monthly recommendation publishes later today.

If you'd like to learn more about how to access to Microcap Confidential and the Do Not Buy List, click here.