How to Avoid Penny Pumpers

The Wolf of Wall Street is back. But this time, he has an internet connection.

“Spam messages hyping penny stocks are multiplying, accounting for 16% of unwanted email in 2013, up from less than 1% the year before,” MarketWatch reports. “Regulators also charged five penny-stock promoters last week for schemes to inflate share prices to feign market interest, including two cases that involved plans to send email blasts.”

Yes, the pump and dump schemers are out in full-force—and they’re coming for you.

The cycle of a promoted stock

 

Recently, the SEC and the Financial Industry Regulatory Authority said stock spam has kicked into high gear, according to MarketWatch, representing the “inbox equivalent of a boiler room sales operation.”

But he financial media’s obsession with the scammers and the high-flying stocks they tout isn’t doing you any good at all…

Our own microcap expert Thompson Clark says all the media attention given to these so-called “investments” just feeds right into the hands of pump-and-dump scammers.

“The news articles are absurd,” Thompson says. “Instead of warning investors, they do the opposite. That is, they encourage investors to look for these ‘story’ stocks, expecting ridiculous gains with no risk.”

Thompson spends his days sifting through the filth in the over-the-counter market to dig up the few ideas he finds worthy of a serious investment. And he even uses microcap’s shady reputation to his advantage…

“Think about it this way,” he explains. “The average perception of microcaps is that they’re 100% full of scam artists and shady promoters. If that’s the case, then there must be a lot of promoters. That’s because there’s currently over 7,500 listed microcap stocks in the US alone.

“As long as the average investor thinks microcaps are rife with frauds, I’ll continue to recommend my readers invest in them. The less competition, the better. Take, for example, a microcap company that I recently recommended to my subscribers. It’s been a publicly traded microcap for close to twenty years.

“It’s very possible this tiny company could become a billion dollar company.  Soon…”

And stay away from those promoted stocks. They’ll bring you nothing but trouble…

Regards,

Greg Guenthner
for

PS: With fear and panic comes opportunity. Of course, there’s no promoting involved in Thompson’s investment thesis. It’s just simple math, economics, and common sense. to see how you can trade the trends for big gains…