China Teletech Holding, Inc. (PINK:CNCT) Dropping after Focus Media Pump

There are two basic reasons for stock pumps on the OTC. One is so that an interested party can dump its shares, and the other one is what was behind the pump of China Teletech Holding, Inc. (PINK:CNCT).

CNCT dropped 24.30% yesterday and closed at $0.215 per share on record volume of 26 million shares. CNCT was pumped by Focus Media, the entity which owns and operates the Stock Psycho and Darth Trader newsletters.

Getting back to why they pumped it, the pumpers provide an answer in their disclaimers. The goal is to expand their database for the benefit of future paid pumps. Another reason is to make their track record look less disastrous.

The previous tout of the outfit was Primco Management, Inc. (OTC:PMCM). There was a small theoretical chance for day traders to make some profit, but anyone who bought in and didn’t sell the same day got burned.

The one before PMCM was Family Room Entertainment (PINK:FMYR), and the story was pretty much the same.

With pumps that aren’t paid by third parties, chances are traders who play the pump can get some profit before the pump fails, because in theory there shouldn’t be a third party looking to dump its shares on the open market.

Still, even non-compensated pumps eventually crash, and there is no reason CNCT should be an exception. The pump also managed to get OTCMarkets to put the buyer beware sign on CNCT‘s quote.