Beware of Penny Stocks
80Beware of Penny Stocks
I decided to write this article after noticing a serious trend on
investment boards, That trend being penny stocks. Penny stocks are seen
by some as a low cost investment with a chance for enormous returns.
Unfortunately most people are unaware of the amount of fraud and paid
manipulation that takes place in the penny stock market.
The first thing you need to understand is that penny stocks or "pinks" have very little oversight from the SEC. Unlike the NASDAQ or NYSE stocks listed on the pink sheets are not subject to the close scrutinizing eye of the SEC.
But first please keep this in mind, as it's the most important piece of information you will read in this post. Less then 1% of penny stocks ever move up and trade on a higher exchange. Keep this in mind when you read that next hot email tip about a stock thats sure to skyrocket. There are a few stocks which have, for example Tazer which became the darling of the NYSE for awhile, but keep in mind these companies are very few are far between.
The second point I would like to touch upon is the fact that allot of stocks that are traded on the pinks are out right SCAMS. For example I would like to touch upon the saga of Mina Mar, this company has long ran shell companies traded on the pink sheets, yet no long term investor has ever seen a positive return.
The typical MO of these companies is to set up a shell company which has no intrinsic value then to pump the stock value in several different ways. One of the most popular is paid pumping. The company will give a large amount of shares to a website which specializes in pumping stocks. I'm sure you've seen them, these sites that claim they have the next hot stock pick that will make you millions if you just subscribe to their mailing list.
Unfortunately these stocks never retain any long term value. Sure you may see marginal or better gains as the paid pumping takes it's affect, but then the stocks will plummet leaving investors stranded having lost almost all value in their stock.
The problem in Penny Stocks as I said before is there is very little oversight. Pink sheets should always be looked at as 'Caveat Emptor' (buyer beware).
Now, can money be made with penny stocks? The answer is yes... but never look at penny stocks as long term investments. The only real way to make money of penny stocks is to buy low (as in bottom prices) and sell the stocks on the hype of press releases put out by the companies.
A stock purchased at .0001 then sold at .0005 is a 500% return on your investment. But pulling this off is trickier then it sounds and should only be attempted by experienced investors who can read market trends and know when to pull the trigger and flip the stocks for profit.
Sadly this means if you are a new investor penny stocks should be avoided unless you are willing to take some large hits and loose some money when you start.
Now I would like to leave you with one last piece of advice. Never assume anything you read on investor forums is true. When stocks climb or fall a great deal of people will post false information in an attempt to pump the stock or drive it's price down. Also be aware when stock prices fall many people will tend to use poor excuses in an attempt to get the stock back up to reasonable levels so they can pull out.
Here's just a common list of excuses you will here when scam stocks go bad....
-the bashers are short
-don't listen to all these bashers
-MM's are holding this one back
-i'm buying at these levels
-this thing trades on air
-slap that ask
-to da moooooon
-the TA is gagged
-this thing is going to fly
-look at all the after hours buying
-this thing is obviously being shorted
-just wait till the buyback is complete
-longs will be heavily rewarded here
-i feel a short squeeze coming soon
They go on and on. Finally two pieces of information about pink sheets stocks to always keep in mind. There is NO after hours trading in pink sheet stocks. And secondly and this is a big one to remember you CAN NOT short penny stocks, it's simply not allowed by most brokers and even if you can why would someone short a penny stock when shorting it costs them $2-$3 per share... makes no sense huh?
Invest safe, and be cautious!
Happy Money Making,
Tony
The first thing you need to understand is that penny stocks or "pinks" have very little oversight from the SEC. Unlike the NASDAQ or NYSE stocks listed on the pink sheets are not subject to the close scrutinizing eye of the SEC.
But first please keep this in mind, as it's the most important piece of information you will read in this post. Less then 1% of penny stocks ever move up and trade on a higher exchange. Keep this in mind when you read that next hot email tip about a stock thats sure to skyrocket. There are a few stocks which have, for example Tazer which became the darling of the NYSE for awhile, but keep in mind these companies are very few are far between.
The second point I would like to touch upon is the fact that allot of stocks that are traded on the pinks are out right SCAMS. For example I would like to touch upon the saga of Mina Mar, this company has long ran shell companies traded on the pink sheets, yet no long term investor has ever seen a positive return.
The typical MO of these companies is to set up a shell company which has no intrinsic value then to pump the stock value in several different ways. One of the most popular is paid pumping. The company will give a large amount of shares to a website which specializes in pumping stocks. I'm sure you've seen them, these sites that claim they have the next hot stock pick that will make you millions if you just subscribe to their mailing list.
Unfortunately these stocks never retain any long term value. Sure you may see marginal or better gains as the paid pumping takes it's affect, but then the stocks will plummet leaving investors stranded having lost almost all value in their stock.
The problem in Penny Stocks as I said before is there is very little oversight. Pink sheets should always be looked at as 'Caveat Emptor' (buyer beware).
Now, can money be made with penny stocks? The answer is yes... but never look at penny stocks as long term investments. The only real way to make money of penny stocks is to buy low (as in bottom prices) and sell the stocks on the hype of press releases put out by the companies.
A stock purchased at .0001 then sold at .0005 is a 500% return on your investment. But pulling this off is trickier then it sounds and should only be attempted by experienced investors who can read market trends and know when to pull the trigger and flip the stocks for profit.
Sadly this means if you are a new investor penny stocks should be avoided unless you are willing to take some large hits and loose some money when you start.
Now I would like to leave you with one last piece of advice. Never assume anything you read on investor forums is true. When stocks climb or fall a great deal of people will post false information in an attempt to pump the stock or drive it's price down. Also be aware when stock prices fall many people will tend to use poor excuses in an attempt to get the stock back up to reasonable levels so they can pull out.
Here's just a common list of excuses you will here when scam stocks go bad....
-the bashers are short
-don't listen to all these bashers
-MM's are holding this one back
-i'm buying at these levels
-this thing trades on air
-slap that ask
-to da moooooon
-the TA is gagged
-this thing is going to fly
-look at all the after hours buying
-this thing is obviously being shorted
-just wait till the buyback is complete
-longs will be heavily rewarded here
-i feel a short squeeze coming soon
They go on and on. Finally two pieces of information about pink sheets stocks to always keep in mind. There is NO after hours trading in pink sheet stocks. And secondly and this is a big one to remember you CAN NOT short penny stocks, it's simply not allowed by most brokers and even if you can why would someone short a penny stock when shorting it costs them $2-$3 per share... makes no sense huh?
Invest safe, and be cautious!
Happy Money Making,
Tony
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sirgeraldbirkin says:
4 months ago
FBI LAUNCHES SEARCH FOR ALLEN STANFORD'S FELLOW FRAUDSTERS
Now that Elandia founder and Ponzi schemer Allen Stanford is in the hands of the FBI, the Feds are looking for his network of swindlers including Sydney D. "Trip" Camper III. According to SEC filings, Trip Camper was forced to resign from Elandia by Stanford. Unfortunately, the Ahkoy family business, Datec, fell victim to investment fraud by Elandia's Allen Stanford and Trip Camper. Before the bad news could spread, Trip Camper found a new victim in the form of a private Los Angeles company with aspirations to go public. With the help of his new partner in crime, Ed Berkhof, Trip Camper formed a "shell" holding company and ruined this honest company as he did Datec, the Ahkoy family business. Since becoming victims of Elandia fraud, the Ahkoy Family is suing Elandia in Pacific and Florida courts. Meanwhile, Trip Camper remains at large. Recent articles reveal that "FMC Telecom has acquired SMS..." and lists Ed Berkhof as the appointed COO. FMC Telecom founder Frank Cassidy is either Ed Berkhof's NEW partner in crime or he has unfortunately fallen victim to investment fraud orchestrated by Ed Berkhof.
Investors Beware! The FBI is looking to prosecute thieves like Allen Stanford, Bernie Madoff, Trip Camper and Ed Berkhof who are leaving a path of destruction and a wake of fallen victims of fraud. Don't be a victim of investment fraud.
View SEC links
http://www.secinfo.com/d14D5a.v6Q98.c.htm
http://www.secinfo.com/d14D5a.v6Q98.d.htm