As for the future: Well, there is some excess acreage around Peerce's Plantation that might be sold some day for development. But Monarch's new ventures have mostly been flops. Before buying Peerce's Plantation at a bankruptcy auction, the company started a Girl's Life theme restaurant, since closed; a tobacco shop, also closed; and a men's magazine called Adam that lasted three issues.
Hardly a record that would justify this comment on Yahoo: "They told me MAHI will see $100 per share. . . . They are never wrong. So you better buy all you can now. Get a second mortgage and BUY BUY BUY BUY BUY."
_____Previous Columns_____
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Asbestos, Defense Firms Win Lottery (The Washington Post, Nov 8, 2004)
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Got the Flu? Blame the Free Market (The Washington Post, Nov 1, 2004)
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TV Company Takes a Hit on Stock, Ethics (The Washington Post, Oct 25, 2004)
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Merger Delivers Princely Profit for DigitalNet Insiders (The Washington Post, Oct 18, 2004)
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I.C. Isaacs Fashions Its Way To Chart's Top (The Washington Post, Oct 11, 2004)
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More Washington Investing Columns
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Can you believe anybody would fall for that?
And there was more.
"Who cares what this company does?" said one. "They could be makers of manure, but if there is more demand than there is supply for the stock, this stock will skyrocket."
That much is true. The demand may be totally artificial, but when it exceeds the supply, the price goes up. The problem is, of course, that when a stock is manipulated upward it rarely stays up.
"They are very brazen on the chat sites," Jackson Dott said. "I don't think it's funny, but it is silly."
It's also illegal, say officials of the SEC, which has a team of lawyers who monitor Internet chat rooms, electronic newsletters and other sources of stock information, looking for scams.
Some of the people chatting about Monarch stock on Yahoo admit that their strategy is to pump up low-price, thinly-traded stocks, make a quick buck and bail out before the end of the day. They even recommend other stocks that could be run up the same way. Both are fraud as far as the SEC is concerned. Regulators also have found that traders who claim they are just riding the momentum of a rising stock often have connections to the people who started the stampede.
The SEC has brought dozens of Internet stock manipulation cases in recent years. Stopping a scam in progress is problematic, however. If trading is halted when a stock like Monarch shows unusual trading, the stock usually crashes, wounding innocent investors along with the scam artists and the traders riding their coattails.
The best way to avoid getting caught in one of these scams, of course, is not to start day-trading stocks in the first place.
But penny stocks -- which these days means anything under $5 a share -- include little companies that have the potential to be big winners. Low-price stocks have outperformed the blue chips this year. That makes the market even more vulnerable to scam artists.
