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BGOI

a couple of us have been talking about this stock on other discussion pages & i figured it was time for BGOI to have its own page. here we can talk about entry points, dips, news, etc.

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Permalink Reply by TV on March 3, 2010 at 10:33am: never mind.........; ▶ Reply to This

Permalink Reply by R B on March 13, 2010 at 6:08pm: Informative article about penny pumpers from Penny Sleuth:

Weekend Sleuth: Anatomy of a Penny Stock Pumper
By Jonas Elmerraji
March 13, 2010

We get some pretty interesting e-mails here at the Penny Sleuth. From readers who want to suggest the next big play for the Monday Penny Stock Watchlist to folks who want to learn more about Agora Financial’s premium newsletters, our reader messages run the gamut. But not all of the e-mails we get are good ones…

More often that I’d like, I get e-mails like this from readers who were duped by unscrupulous penny stock pumpers:

Following [another newsletter’s] enthusiastic recommendation for [ticker redacted] I lost in just two days about 50 percent of my investment, which means a loss of about $50,000. Something is fishy here. Please suggest what to do now with the 40,000 shares I still own.
Regards,
[Name Withheld]

The fact of the matter is that stuff like this happens a lot — and it happens to intelligent investors who are only searching out the next big penny stock play. But it doesn’t have to be that way. Today, I’d like to run you through the anatomy of a penny stock pump, and I’ll show you exactly how to avoid getting caught up by a pump.

There’s a group of companies that operate on the fringes of the investment world. They’re called “penny stock promoters,” and they’re the bane of my existence.

You see, small companies pay these promoters big bucks — either in the form of stock, cash, or both — to send out e-mail newsletters touting them as the next big stock that’s set to rocket. But unlike the Penny Sleuth (which never, ever accepts compensation to talk about a stock, and even forbids editors from owning positions), these so-called newsletters have a vested interest in the companies they’re talking about.

They send their e-mails to scores of investors, hoping that the ensuing buying frenzy will inflate shares enough for them to make a hasty escape with your cash.

The worst part — according to the Securities and Exchange Commission, it’s all 100% legal.

Penny stock promoters get around the legal quandaries by including tiny disclaimers in the footers of their emails. In them, they admit thinks like, “We received $25,000 for a 2-week profile of [Company X]”

And, “We may have an inherent conflict of interest by sending the newsletter at the same time we may own stock in the same company or even have been paid compensation at the time of the promotion. We reserve the right to sell shares at anytime, even during the time period in which we are profiling a company.”

But with the influx of buying volume that comes with penny stock promotion, the stocks being profiled become volatile, and the chances of getting burned after the promoter sells his shares aren’t in your favor. (To learn more about how it all works, check out this article.) http://pennysleuth.com/a-simple-secret-to-avoid-penny-stock-losses/

So, how can you protect yourself from penny stock promoters?

For starters, whenever you get an e-mail about small-cap stocks, make sure you look for the disclaimer (check out the Sleuth’s 100% Independence Pledge at the bottom of this letter for an example of what a legitimate company’s e-mail footer should look like). Whenever you see that the sender accepted compensation to send you their recommendation, take their advice with a grain of salt.

Likewise, beware of websites and e-mails that post ticker symbols too prominently. Legitimate research firms should focus the reader on their analysis, not on the ticker. Penny stock promoters make tickers as prominent as possible in hopes that trusting investors will blindly buy shares without doing their own due diligence — and it works. Don’t fall for that ploy.

If independent small-cap investing ideas are what you’re after, stay tuned on Monday when the Penny Sleuth will be back with a fresh Penny Stock Watchlist. Naturally, we won’t have a vested interest in any of the stocks we feature.

Watch Out for S&P 500 Resistance at 1150 — Could the market be in store for a short-term top at 1500? Technical analysis whiz David Grandey thinks so… Here’s why.

We’ll be back on Monday with a brand new Penny Stock Watchlist — and yet another chance for you to put your stock picking skills to work...

Until then, please send me any editorial comments or suggestions at editor@pennysleuth.com.

Have a good weekend,
Jonas Elmerraji
Managing Editor, Penny Sleuth; ▶ Reply to This