Sunday, September 28, 2008

Beware of Penny Stocks

I thought I would mention my personal views about penny stocks, although there is a well-stated statement on the home page of Stock Assualt. Have you ever heard of "pump and dump"?

That's essentially what penny stocks are about. I get faxes at my office, from time to time, about monster stocks ready to explode. If you ever receive one, throw it in the trash immediately. Someone is sitting and waiting for a flood of buyers to come and drive the price up so that they can dump it for a huge gain, leaving the unsuspecting buyers "holding the bag".

When you hear the term "bag holder" posted on forums, they are talking about people on the bad end of a dump, or people with a bad deal in general. The AI of Stock Assault 2.0 will never get you into a penny stock, but will always choose valid companies ready to turn upwards in price.

That in itself is extremely reassuring to me, especially the part about impending price appreciation. That's what we are all in this for price appreciation. Have a good one!

- Roger

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