Solve a problem..
I would consider myself a new trader but I have done a lot
of research in different areas of the field and read a lot of books/articles to
educate myself. I have learned about
many areas that would be considered a scam going on in the stock market. People who have been around for a while know
to avoid them and some even know how to profit from the scam without direct
affiliation with the people initiating it.
I would like to take the time to solve this problem and make
sure that none of my readers get involved in any of these Wall Street Scams as
many previous beginner investors have.
The scam runs off of traders that are greedy and want to make that trade
that will make the rich quick. Greed is
the last emotion you want to be running of when making trades in the stock
market as it will not make you get rich quick but get broke fast.
The scam I am talking about is the promoted penny stock or
sometime referred to as a pump and dump.
A pump and dump is when a group or individual purchases stock at a low
price (usually penny stocks). Then they
will go to any means of promoting that stock across the web. Promotions come in ways of email list, phone
calls, blogs, message boards and even creating false articles of something
fantastic that is going on within the company.
The promotions that you see will say that this hot stock
will double by tomorrow or some crazy number that makes it very hard for you to
ignore. People will fall into this trap
as greed kicks in and the want to get rich and double their money in just a
day.
The pump and dump stock will usually go up very quickly and
you will see some crazy increases in stock prices but the prices will soon come
crashing down as fast as they went up. The
stock goes up because of the unusual volume that is being produce to the
stock. The stock will usually go below
the initial price making the majority of the people who bought the stock losing
a lot of money. The guys who started the
pump and dump will have sold the stock that they got at a low price before they
promoted it and once they sell the huge amount of shares that they got the
stock starts to tumble quickly.
I feel bad that people have lost money in this process and
the culprits are still out there doing the same thing as very few have been prosecuted
for these actions. The best plan is to
know what to watch for and avoid them at all cost. I have a few tips of you below to avoid the promoted
stocks.
Tips for avoiding a promoted stock:
If it sounds too good it probably is. It comes down to common since sometimes no
matter what you are doing in life this is a wise statement to take with you.
Don’t purchase a stock because a news letter says you
should. News letters are often
promoting stocks so that they can make money on their stock and you lose money. It is hard to find a reputable news letter
giving you honest stock picks.
Penny stocks are very risky and hard to predict. Penny stock vitality is very high and not a
lot of people have figured out a good strategy to trading penny stocks so be
very care full if you do but penny stock start will smaller amounts.
Don’t let greed stand before the fundamentals. Greed will make impair your decision making. Do your research before making the jump into
the stock.
“Get rich slow or go broke fast” is a good quote to
remember when trading. You will have
trades where you hit it out of the park in a short period of time but more
likely than not it will take a few months to see substantial returns.
Promotion stocks have been very successful because it is
very hard for the SEC to regulate and track.
If you where to Google penny stock or something along those lines I am
almost positive that you could find a place to put your email so you can
receive free penny stock picks that will make you rich. The emails will look legitimate and they will
say that yesterdays stock pick had a 250% gain.
The reality of the situation is that you will most likely won’t get any
of that 250% as the stock will go up so fast or go up while the market is
closed by the time you get a chance to get the shares the stock will start slamming
back down to the regular level.
The promoter has the stock before he promotes it so he make
the huge gains and you get suck “holding the bag” shares that are worth next to
nothing. Please don’t fall into the
traps of the promoted stock as many people have you will end up losing 99% of
the time.
I am glad that I can inform you about the promoted stock and
pump and dumps before you lose money. I
have posted a list of some of the bigger companies that are publicly traded and
I would suggest that you stick to some of those companies as you begin you
investing endeavors. You don’t have to
worry about those stocks getting promoted.
I hope that together we can inform each other about the promoted
stock and solve the problem this will make the stock market a fair place for
everyone to trade regardless of your net worth or experiences.
Thanks for checking out The Wall Stock Journal I will keep
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comment on a post so we can be in contact.
Thanks!
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