Posts Tagged ‘buy penny stock’

Buy Penny Stock Online | Buy Penny Stocks Online – Good Idea?

If you’ve ever thought to yourself “I might buy penny stock online”… hold that thought. There are a TON of scams, fraud and spam going on in the wild world of stock trading, but more specifically dealing with penny stocks. To give you an idea of how much garbage is being peddled online (as it relates to penny stocks), a study done at Oxford found that 15% of ALL spam was related to penny stock fraud.

I’m not here to say “Don’t buy penny stock online!”… I just want to inform you of some fraud/spam/scams that are making the rounds at the moment. The whole key to buying online is finding a credible source of information. Anyway…

One of the biggest fraud schemes going is known as selling “chop stocks”. Chop stocks are stocks purchased for pennies and then sold for dollars… this gives the brokers and stock promoters insane profits per share. When this kind of stuff happens the brokers are paid under the table to sell the stocks… super shady stuff.

Another big one is known as the “pumped and dump” scheme. The concept is simple and you may have heard of it before… it involves misleading statements (typically flat out lies) in an effort to “hype” the stock (i.e. pump it up). The stocks are then “dumped” on the public at inflated prices. This scheme is mainly done using the Internet but sometimes you’ll get a call from a telemarketer.

Pump and dump schemes are usually promoted through email spam but you’ll also find people doing it on online message boards/forums. The same study that found 15% of all spam was related to penny stock fraud found that people who responded to the scam lost 8% of their capital/investment in just 2 days… meanwhile the spammers would see a return between 4.9% and 6% when they sell. Not cool…