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Hot Penny Stock Picks – The Newbie Investor’s Elusive Fantasy

Hot penny stock picks are all the rage on stock trading message boards and in online stock communities. And know who is profiting the most from this phenomenon? Fraudsters, that’s who. They are wolves preying on the wet-behind-the-ears investors trying to shortcut their way to micro cap fortunes. If you are new to this field of investing, or new to investing at all, you should be very skeptical and cautious about all the information you absorb before you put real money on the line.

So Who’s Hyping These Stocks?

The elusive hot penny stock picks are exploited by two main parties: perfectly legitimate brokers who hype their services to lure new customers and completely illegitimate newsletter owners, forum community members and yes, even obscure brokers. In a good majority of the cases, the latter is more common and pervasive.

Unless the origin of the advertisement or promotion is someone like TDAmeritrade, Charles Schwab, Fidelity, E*Trade or someone else of their ilk — in other words, established well-known and reputable brokerage services — then you should be very skeptical of a claim of hot penny stock picks. In fact, those legitimate services won’t actually provide you with a direct list of hot stock picks. Instead, they’ll provide you the tools and services to research and execute your own white-hot micro cap stock investments.

Sketchy Schemes Instead Of Sound Strategies

Most other individuals and organizations promoting top stock picks are probably involved in some kind of scheme to flat-out rip you off through a scheme called chop stocks or use you to inflate the value of a stock to execute the pump and dump scheme. There are a lot of people making a ton of money with nano cap stocks, unfortunately many of them aren’t making them through actual savvy investment strategies but rather through ruthlessly exploiting novice investors too eager to just get rich as fast as they can.

Penny Stock Newsletters to Fuel Pump and Dumps

In particular, I have seen many cases of people becoming seduced by the lure of online or email stock newsletters that promise to make all your successful stock picks for you. In most cases (though to be fair, not all cases), these newsletters are actually part of a pump and dump scheme. That means they are using you to inflate the values of certain stocks so they can sell them off after the stock has been hyped beyond its actual value. If you don’t know this is happening, you get stuck with a penny stock that sinks in value with remarkable speed.

So before you spend too much time and money sifting through online claims of hot penny stock picks, you need to ask yourself if you’re ready to really exercise the due diligence required to succeed in this volatile and fraud-ridden field of stock trading.

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