Thursday, September 12, 2013

Penny Stock Newsletters and Penny Stock Pickers: Using Them To Your Advantage

If you follow the world of any stocks and micro cap companies, then you have probably run into the penny stock for motor for email subscription system for offering to give you the best penny stock picks.

FINRA as well as other governing bodies of securities (SEC), have been prone to issue warnings about these services. The amount of fraud and criminal activity in the micro caps sector is prevalent today more than ever. An investor should he decide warning: seriously and not take them lightly. Here are links to the most recent FINRA warnings about penny stocks: FINRA, SEC Warn Investors: Don’t Trade on Pump-And-Dump Stock Emails, FINRA Fines Oppenheimer & Co., Inc. $1.4 Million for Sale of Unregistered Penny Stocks and Anti-Money Laundering ViolationsFINRA Warns Investors of Marijuana Stock Scams

Once you understand the high risk associated with investing in micro cap companies and penny stocks, you should understand that only accredited investors are allowed to invest in these companies. If you are an accredited investor than this post is for you.

The Penny Stock Newsletter and the Penny Stock Pick Email (Blast) subscription service.

If you are an avid investor in penny stocks, at this point you should have run into someone or some entity offering a penny stock news letter or an email subscription service offerings penny stock picks. For the most part, these penny stocks services are extremely bias.  These services have either been paid by the penny stock to promote their company or have a position themselves in the company. Very few penny stock newsletters, if any, have no interest in the company at all. But this can be used to your advantage. Let us assume one of two things, one that the penny stock newsletter is being paid by the company to promote the stock, into that the penny stock newsletter has a position itself in the company or stock.

If the penny stock newsletter has been compensated by the micro cap company to promote their stock ticker, then this can be used to the investors advantage. An investor relations company that has been compensated by a penny stock to promote their stock, means that they are undergoing investor relations. All other things being equal, this is a positive thing for investors. This means the company is trying to bring awareness to their stock and that liquidity will more than likely rise.

If a penny stock news letter or email subscription service has a position in a micro cap company, this is also a lucrative thing for investors. This means that the penny stock newsletter is in a position to wants to make the stock go up, or at least to create a general awareness about the company.

Even if the stock pick or the feature in a penny stock newsletter is false or egregious, if there is a large following for the newsletter or email subscription service, it generally brings a ton of investors to the table buying up the stock and driving the price higher. This creates the opportunity for an investor to speculate on momentum. These momentum shifts in micro cap companies are generally short-lived, sometimes as short as a few hours in the training day.

To be clear, we never advised that you invest in a company solely because it is featured in a penny stock news letter or email subscription blast. But the truth remains that some of the services do create a momentum shift in the company's trading activity.

It should be noted that some of these penny stock newsletters and email subscription services are touting stock simply to dump their shares on the open market. Want some of these services have dumped their shares on the open market, the promotion services cease, in stock prices decline to a point where it makes it impossible for an investor to recoup their initial investment.

The Takeaway

An investor should always assume that an email blast subscribing to be able to pick the best penny stocks, or penny stock newsletter promoting or profiling micro cap companies are self-interested. One should never assume the legitimacy of a company or stock based solely on the fact that it has been profiled on a penny stock newsletter or because you have received an email saying that the stock is a good pick. You can assume that other people have received the email as well.

The MicroCapCompany Team
Posted By: Nicholas Coriano 
Follow Nicholas Coriano on Twitter

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About the Author: Nicholas Coriano is a Business Consultant and Planning Guru.  He is a graduate of The University of Connecticut Business School and the John Marshall Law School in Chicago.  He has worked at Merrill Lynch, The New York Stock Exchange and as an Investor Relations Agent & Consultant to Micro Cap Companies and Penny Stocks.  He is the founder and author of The MicroCapCompany.com a blog focused on providing information and advice to Micro Cap Company Executives and Investors.  You can also find him blogging about Social Media, SEO, Web Development and Tech on PushYourRank.com

About MicroCapCompany.COM: MicroCapCompany.COM (The Blog) is a blog focused on providing articles, news and information on the micro cap sector and start-ups.  The Blog is a free service offered by Cervitude™ Investor Relations (a micro cap investor relations firm) and offers compensated research reports and business plan writing services for micro cap companies and penny stocks.  If there is a particular topic you would like to see covered on The Blog, email CervitudeNetwork@gmail.com, If you would like to advertise on The Blog, click here

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