Wicked Schemes To Avoid When Investing In Penny Stocks

1. Wicked Schemes To Avoid When Investing In Penny Stocks Any time there is the potential to make a lot of money, you can bet there is also going to be scam artists trying to scam people. Trading penny stocks can yield very substantial profits over a very short amount of time. However, you have to be careful how you go about it because penny stocks are much more vulnerable to scams since they are not closely regulated by the SEC (Securities Exchange Commission - the federal agency that regulates stocks) and the price is much easier to manipulate than other stocks. Here are the most common penny stock scams: Penny Stock Scam Spam This is a common variation of the "pump and dump" scheme. Scammers buy up a bunch of stock, usually in a thinly traded company where there is very little information available publicly, and then they hype it ("pump" it) through unsolicited email to people whose email they get from buying a list(s). This hype generates a flurry of trading which quickly raises the price and then they sell it at a significant profit ("dump" it) - believe it or not, they get about a 6% return response! Never EVER buy a stock based on an unsolicited email. It is most assuredly a scam - no matter how cleverly worded.

2. People Pretending To Provide Insider Tips In a Forum Be really careful with this one. Sometimes this is done by a scammer in a classic "pump and dump" but there are also well-paid consultants hired by companies to hype their stock on forums. They are professionals and they KNOW what they're doing. They know how to make a story sound believable with fake press releases, etc. They also understand that subtle "slips" (pretending to be accidental) on a forum can be more effective than blatantly promoting a stock. The Short and Distort Scheme Here's another fairly common "pump and dump variation. A fraudster first sells short many shares of a stock. Then instead of hyping it, he bad mouths it to get people to dump it in droves and artificially drive the price down so he can make a bundle. Mis-dialed Messages - Wrong Numbers Leaving a "Hot Tip" The SEC says this is the latest "pump and dump" scheme. This is where you get a message from someone you don't know leaving a hot stock tip for a friend - they make it sound like they accidentally mis-dialed and accidentally left you the message - BUT it is NO ACCIDENT. Beware of any information you receive in this manner - and there will probably be another variation of this "accident" tomorrow.

3. Free Penny Stock Picks Anyone who is really good at picking penny stocks isn't going to give you their best picks - or even good picks - for free. Picking penny stocks is a highly specialized skill that few people can do and it takes a lot of time. Finding a really good penny stock picker is like finding a rare diamond - and they aren't going to give this information away for free. Free picks are very often "pump and dump" schemes. Beware of anything "free" in the penny stock world. It could very easily end up costing you most of your investment. Now, Here's Easiest Way To Make Substantial Profits With Penny Stocks Find a penny stock picker with an uncanny ability to pick penny stocks. Have them send you their picks with no delay and then follow what they do precisely. This type of service will not be free but if you pick the right service you will easily make your money back many times over. If you want to learn more, then consult with the experts at Paradigm Capital Management. Paradigm Management is a trusted leader in small cap investing and invests in value stocks of companies across all capitalizations Contact at (518) 431-3500or visit http://www.paradigmcapital.com/