Tuesday, August 3, 2010

Killerpennystocks.com Scam

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My readers are reporting this week that they're concerned about a killerpennystocks.com scam. I guess that this week they released another hot penny stock pick. The alert this week was AlphaTrade (OTC:APTD). I wrote an article called Killerpennystocks.com if you want to check it out.

This alert should really be called a "micro" penny stock because it was trading at .005 cents a share. After they announced their pick, it surprisingly went up by about 30 percent but today it's also down 30 percent. My contention has always been that these stocks are being manipulated by someone and the news that is put out is also planted.

Do I have any proof of this? No.

I suppose that you can possible make money in penny stocks and I'm by no means and expert with trading penny stocks, so you can take what I say with a grain of salt. However, you should be exercise caution trading stocks that trade so cheaply.

The first reason is that these stocks are cheap for a reason. It's because they are worth what they are trading for.

Second, because they are so cheap, the big money won't by buying them. So, you can probably expect any run in price to be short lived.

You are better off concentrating on stocks that trade on the NYSE and the NASDAQ and not on the OTC market. William O'Neil even recommends focusing on stocks over $15 for the NASDAQ and $20 for the NYSE.

Also focus on stocks that have proven earnings and sales, not on press releases. The press release strategy makes it seem there's real news, but I think it's manufactured by the people playing these stocks.

Remember that in stock market investing, you generally get what you pay for.

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