Penny Stock Fortunes Scam

Penny stocks are low-priced shares of small companies not traded on an exchange or quoted on stock exchange markets. The rewards in buying good penny stocks could be great but penny stock buying is filled with many risks. The greatest risk of penny stocks is that you can quickly lose all your money.

Penny stocks fortunes scam happens when the insiders talk the stock up on one hand while bailing out like there’s no tomorrow on the other. That’s usually because despite the great story –the company’s business prospects are usually none. Thus, investors quickly lose all their money.

In order to avoid getting scammed by a bad penny stock investment, firstly, avoid accepting hot stock tips by phone or email. Better hang up the phone because chances are you’re being scammed by boiler room operations. These unscrupulous operators scoop up worthless shares at fractions of a penny and then attempt to sell them for a few dollars per share.

Also avoid penny stock trades in unregulated exchange. These are penny stocks that do not have to meet compliance and reporting requirements. Stocks that trade in the OTC and pink sheets are also to be avoided.

In addition, be careful in purchasing a penny stock with erratic trading activity. It could be very difficult to sell the shares since you could be stuck with the shares for a long time since it’s very hard to find a buyer. Always remember to properly evaluate the company by obtaining their financial statements. If no financial statements are issued, the company might have something to hide or they may not exist at all. Additionally, beware of companies that constantly issue statements that highlight the latest developments of its company or its stocks but provide incomplete or not any detail on how it helps increase revenue or profits.

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