Topic: OTC Penny Stock Scams

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Posted at February 21, 2006, 7:52 am:

Any of us who have studied the stock market has surely heard of the penny stocks that are relegated to the "Pink Sheets". These are stocks that are trading so low - under $1 per share and many times for literally pennies.

These stocks are somewhat easily manipulated in price by a small number of people. They slowly buy shares until they have thousands upon thousands. Then the master plan is put into effect - they then go out and hype the stock anywhere and any way they can in an effort to generate interest in the issue.

They do this so the stock gets "noticed" and some people will start buying it. This causes the price to start rising and in turn gets more interest going.

After a couple of months the price has risen significantly(by comparison) and the originators of the trend sell their shares in small blocks so as to not cause a price collapse or get to easily noticed and they move on to the next stock they have in mind.

I knew a guy who did this back in the late 90's. His group was buying up shares of a virtually unknown company at prices between 15¢ and 25¢ each. Then they started the hype. In about 3 months interest was getting high and the share price had climbed to almost $8! They sold out and walked away with several million dollars.

At last check, the stock was trading for less than 10¢ a share.

Why did I just go through all of that? Well, that's because the same thing is going back into full swing once again. Now that the markets have recovered, the economy is doing well and people are starting to go back to buying stocks on their own, the hype machines are back in full swing.

Several times a day, every day for the last 2 weeks I've been getting emails hyping one penny stock or another. They all say the same thing - "With the great news about to be announced this stock is going to explode. Get in now at bargain basement prices. This ones going to the moon!"

Either that or an email comes in that is made to look like it came from a stock broker and was accidentally sent to me totally by mistake. This email has nothing but someones name who was supossed to really get the "inside tip" and then a website link to go see the hype. The website links are all just one page advertisements for the stock usually on a free website.

Every one of these are a scam so folks, don't fall for them if they come your way. Invest wisely, invest in real stocks and do your research before investing.Steve
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Original of the message was taken from http://www.auctionbytes.com/forum/phpBB/

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