Don’t Fall For The Hot Penny Stocks
Statistically, investing in penny stocks has resulted in more overnight millionaires than any other investment vehicle. To be among these ranks requires a large tolerance for risk, an even larger bank account, impeccable, flawless timing, along with choosing the hot penny stocks. There are many people and companies that will try to sell you the miracle shortcut to riches. Here are some examples of what to avoid when investing in hot penny stocks.
First, be especially careful with telemarketers. Most reputable and legitimate companies rarely, if ever, resort to using telemarketers to sell their stock. A phone salesman trying to peddle investments and the next hot penny stock is likely a fraud-monger. These telemarketers are extremely slick. They will have you believing that the hot penny stocks they’re selling is your ticket to financial independence. They’ll use high-pressure tactics to get you to buy today. They might even act like your best friend and advisor. Make no mistake, their only interest is to off-load some over-the-counter stocks that are virtually worthless. If you actually invest in one of these schemes, you might find it almost impossible to sell off the hot penny stocks you bought. The movie “Boiler Room” is a perfect example of this type of peddler.
Next, steer clear of very low volume stocks. When stocks aren’t trading with any significant volume, you will be unable to purchase or sell the penny stocks for the prices you want. Further, it clouds any sort of educated judgment you can make about where the stock is headed. Don’t be suckered into buying very low volume stocks being billed as the next hot penny stocks tip.
The hot penny stocks tip is a classic sham to be avoided. There are professional promoters whose sole job is to generate hype about a particular stock. They bill the hot penny stock as the next big thing, guaranteed to skyrocket and yield tremendous returns. It is like a bad rumor come to life. The tip is spread by word of mouth offline and over the internet. You might have even been the recipient of one of these rumors yourself. “Hey buddy, I got a hot tip for you, sure to make you a boatload of cash!” The rumors start spreading like wildfire, and the excitement generated will cause people to buy the stock without exercising any sort of due diligence. The truth is, if there really were a penny stock that was red-hot, you likely wouldn’t hear about it because those that are privy to the information will likely keep it to themselves.
With the promise of instant riches, it’s no wonder so many people are taken by shills and shams. Participation in these schemes definitely generate a tremendous amount of profit. The problem is, it’s at your expense.
