Have you ever typed into a search engine "hot penny stocks" hoping to find a tip that will make you rich?
If so, you are certainly not alone! It is one of the most popular search phrases on the internet. However, if you really want to make good money with penny stocks, it is most definitely not a good idea to follow the advice at any site that is hyping "hot penny stocks" and using that term a lot. In fact, this is almost a sure fire way to become a victim of a scam.
Let me explain...
Penny stock promoters (aka scammers and hypsters) know that people are actively searching for "hot penny stocks" and they know that people who are searching for this particular phrase are in a the frame of mind that is the easiest to manipulate. They are basically pre-sold on the idea of making money fast from a scammy type scheme. These promoters pay big money to have their websites customized in such a way as their site comes up in the search engines with this term is searched on. It's like putting the perfect bait on the line to fish for "suckers." I know this is a terrible term to use about another human being but that's exactly how they view the potential investor with their heart set on making money fast - suckers! These are the people they love to take advantage of.
And... people don't just use search engines to hunt for "hot penny stocks." Hang out in any stock forum for any length of time and invariably someone will ask, "Does anyone know of any hot penny stocks?" Of course, this plays right into the hands of the scammers too. Any time anyone asks a question like this, they chime in with their "opportunity of a lifetime" hype.
Once a stock is hyped, a sort of feeding frenzy begins. People start buying the stock like crazy and the price soars. The stock quickly becomes not just hot but "red hot." However, let me ask you this:
Is red hot really "hot" in terms of the chance you'll actually end up making a nice profit?
Short answer: Absolutely not! I invite you to read my article, "How To Make Money On Penny Stocks," to learn a much more dependable and consistent way of making money with penny stocks.
For me, the phrase "hot penny stocks" has basically become a code word for hyped up stocks being artificially pumped that will eventually be dumped by the promoters hyping them. They buy up a bunch of shares, hype the heck out of the stocks to drive the price up, and then quickly dump the shares making a fortune in the process. Of course, the price of the stock plummets as soon as they dump their huge block of shares which leaves the many victims of these scams holding worthless shares of stock that they can't sell because everyone wants to sell and no one wants to buy. This is all planned out IN ADVANCE and it happens often. If you don't believe me, then check out this SEC bust on several penny stock promoters.
This is what the Director of the SEC Enforcement Division had to say about these promoters:
"These corrupt promoters meticulously planned their schemes down to the last detail, except for the possibility that they were walking into an undercover operation."
The scam artists that run these schemes know that the easiest way to rip off innocent investors is to play on their emotions and desires by pretending to give them exactly what they want - it's not until the very end of the scheme that the axe actually falls and the investor realizes they've been scammed. By that time it is way too late and they often lose their entire investment.
I want to emphasize to you this point: penny stocks that are being promoted as so called "hot penny stocks" are almost never really hot in terms of you actually be able to make money from them. I just can't emphasize this enough.
What makes matters even worse is the unscrupulous efforts by many to actually intentionally seek out these hyped up stocks - intentionally look for pump and dump scams - so they can short these over-hyped stocks and attempt to make money with these stocks crash (good way to get burned too... check out my article, "How To Make Money Shorting Penny Stocks - NOT"). You see disgusting slogans like, "buy on rumor." The language they use to describe what they do (because they are trying to sell you their course) attempts to make it sound like they're doing something noble - like they are essentially scamming the scam artists. But what is actually happening? Think about it - these guys are just as bad as the scam artists intentionally manipulating worthless stock as they are actually intentionally trying to profit off the victims of these scams. Plus, they add fuel to the whole pump and dump scam cycle.
This pump and dump scam cycle is what gives penny stocks a bad name and this is very unfortunate as there really are some amazing deals to be had if you know where to find them. In fact, penny stocks are much more profitable than other stocks if you know how to avoid the scams. I have found the best way to find profitable legitimate penny stocks that will make you a nice profit on a consistent basis is to buy premium penny stock picks from experts who specialize in penny stock research (which takes a bunch of extra skills that most stock analysts don't have - see my best source of picks below). If you can find a really good source for these stock picks and trade these, you really can make a very nice profit over the short term and a small to large fortune (depending on how much you trade) over a period of just a few months. Here is the best source of penny stock picks I have found. This guy is dead on the vast majority of the time.
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