Like any other business opportunity, penny stock investment requires finding out as much as you can about the product being offered and weighing its advantages and disadvantages. If you receive a phone call or email that urges you to buy a hot stock pick of the day, you have a choice: Either be careful, even skeptical, or accept the offer blithely.
One common investment proposal that you will find littering your inbox is penny stock offers. They are very persuasive and if you don't think with your mind, you will easily fall to their trap of absurd return claims and ultra convincing testimonials. It gets worse if you don't have basic financial literacy or if you do not know anything about the stock market. You will easily fall into the trap and lose your money.
In the words of Warren Buffet: Don't invest in anything you don't know about. If you don't know anything about penny stocks, then don't start. Learn about it first and seek guidance from the experts before diving into anything so risky like penny stocks. To know if the messages about penny stocks are scams, here are some tell tale signs it is a scam.
The first sign are guaranteed returns and absurd return claims. Stocks are risky investments. In fact, among the investment products pyramid, they are right at the top. So definitely, there are no guaranteed success rates. The only things guaranteed with stocks are volatility and risk. Returns in stocks are the highest among investments because of the high risk. But absurd returns are phony. If such returns were true, the odds of someone achieving that is like someone hitting the jackpot prize. You can only make true money on stocks by investing long term just like how Warren Buffet did. He's not the greatest investor for nothing.
Second, scams usually say the deals are for a limited time only and the investment price is very cheap. This makes you think the coast is clear and you will be getting a bargain. But once again, not doing due diligence on any investment is the biggest risk you can take. You can lose all your money in that single lapse of judgment.
Next, the testimonials and claims are often very persuasive and impressive. This should send another bell ringing in your head. Check out their claims and see if they are true. More often than not, they are lies, blatant lies at that.
So how can you tell which penny stock offers are scams? It's not easy; but it's not that hard either. Don't be gullible; don't be easily fooled. Verify the stock's authenticity, and the credibility of the broker or promoter touting it. Check their company records, which ought to be available online; if they're not forthcoming with their information, then there's something wrong. Make sure the company offering the shares has legitimate state and federal licenses to do business. Always double-check to see if such companies are registered with the SEC.
Never be pressured to make an investment decision. Always give time to study the offer before making a sound decision. Success is not instant, especially with stock investments. You have to learn about stocks, and about trading. Long term is often the best strategy in stock investment. Just look at Warren Buffet.
One common investment proposal that you will find littering your inbox is penny stock offers. They are very persuasive and if you don't think with your mind, you will easily fall to their trap of absurd return claims and ultra convincing testimonials. It gets worse if you don't have basic financial literacy or if you do not know anything about the stock market. You will easily fall into the trap and lose your money.
In the words of Warren Buffet: Don't invest in anything you don't know about. If you don't know anything about penny stocks, then don't start. Learn about it first and seek guidance from the experts before diving into anything so risky like penny stocks. To know if the messages about penny stocks are scams, here are some tell tale signs it is a scam.
The first sign are guaranteed returns and absurd return claims. Stocks are risky investments. In fact, among the investment products pyramid, they are right at the top. So definitely, there are no guaranteed success rates. The only things guaranteed with stocks are volatility and risk. Returns in stocks are the highest among investments because of the high risk. But absurd returns are phony. If such returns were true, the odds of someone achieving that is like someone hitting the jackpot prize. You can only make true money on stocks by investing long term just like how Warren Buffet did. He's not the greatest investor for nothing.
Second, scams usually say the deals are for a limited time only and the investment price is very cheap. This makes you think the coast is clear and you will be getting a bargain. But once again, not doing due diligence on any investment is the biggest risk you can take. You can lose all your money in that single lapse of judgment.
Next, the testimonials and claims are often very persuasive and impressive. This should send another bell ringing in your head. Check out their claims and see if they are true. More often than not, they are lies, blatant lies at that.
So how can you tell which penny stock offers are scams? It's not easy; but it's not that hard either. Don't be gullible; don't be easily fooled. Verify the stock's authenticity, and the credibility of the broker or promoter touting it. Check their company records, which ought to be available online; if they're not forthcoming with their information, then there's something wrong. Make sure the company offering the shares has legitimate state and federal licenses to do business. Always double-check to see if such companies are registered with the SEC.
Never be pressured to make an investment decision. Always give time to study the offer before making a sound decision. Success is not instant, especially with stock investments. You have to learn about stocks, and about trading. Long term is often the best strategy in stock investment. Just look at Warren Buffet.
About the Author:
The critic who wrote this feature has identified a corporate finance expert named Josh Yudell. I believe Josh Yudell to be widely considered an expert in the fields of investor relations, SEC compliance, corporate finance and capital structure.
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