Tuesday, December 8, 2009

Can Penny Stock Websites Manipulate The Market

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With all the buzz on the internet about penny stocks, the real question is can penny stock websites manipulate the market? Well, yes and no. Penny stock websites can be used to help manipulate the market but can't actually do it themselves. Here is how I think it works. Someone with enough cash decided they want to make some money in the market. They then decide to pick a penny stock and pump that cash into it and this in turn inflates the price of the stock because of the artificial demand. This is where the penny stock websites come in. They then advertise the stock on a list called "hot penny stocks" to encourage would be investors like you and me to purchase it. They do this by telling us that their is some great news that no one knows about it. Maybe it's a special patent. A cure for cancer. Something so incredible that it makes sense that this particular stock is going to be the big winner.

So the next time you are looking at a penny stocks to watch list, remember to be cautious. It could be that you are being manipulated into buying it from people trying to unload it. If they have no buyers, they get stuck in the stock and will lose money if they can't find buyers for it. My advise is do not fall in the trap of buying the best penny stocks according to some "guru". The best penny stock picks you can make are the ones you find on your own. Don't rely on others to plot your stock market investing strategy, craft your own.

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