In the video above, Timothy Sykes does an excellent job describing how to distinguish a stock scam from a legitimate investment opportunity. As Timothy explains, there are approximately 8500 “scam stocks” trading on the OTCBB that exercise “pump and dump” strategies to drive share prices up.
The marketing tactics of these companies may be overly aggressive. However; for savvy investors, trading these types of stocks can be potentially lucrative if you know what to look for. Tim further explains that he has no reservations investing in what he considers “horrible companies” as he simply plays the odds when noticing a penny stock jump from 100-200%. (Smart thinking!)
One must take into consideration that promoted “hot penny stocks” are usually marketed to individuals who are susceptible to impulsive buys based on reading “jazzed up” marketing materials. Most Kool-Aid drinkers will either make a buying decision or spread the hype to other suckers who are drawn into flashy money making schemes. Most people do not perform their due diligence nor read the fine print contained in the marketing materials.
The independent marketing firms promoting these stocks are making out like bandits should they play the movements that they create. Always do your research before moving forward with a promoted or speculative investment. If you play your cards right, you may be able to profit from the hype when spotting breakouts and shorting accordingly.
