Investment scams have been a regular part of the news the past ten years. All of these scams have a common element. They seek to induce heard behavior and then head in the opposite direction. The direction of the stampede is irrelevant as long as the scammer runs the opposite way.

The element of dishonesty is what make something a scam. Con artists say things they know are untrue to make money.

Here are the two most common investment scams:

Pump and Dump
The classic example of this scam in Enron. Use phony news, info, and stats to pump up the value of something temporarily and dump your shares in it while the price is still high. When the bubble pops everyone else will be left holding the bag and you’ll be sitting pretty.

Trash and Stash
This is the reverse of the pump and dump. A good example of this took place on August 25, 2000. A college student created a false press release and spread it on the internet. The release said Emulex would not meet earnings expectations. The company’s share price fell 62% in less than an hour. The scammer shorted the shares of Emulex and covered his short position with the temporarily cheap shares of Emulex to make his money.

Unless there’s a general rising tide you’ll never make money when you are part of the stampede. If you want to profit you have to set yourself apart from the crowd and do something different.