Penny Stock Message Boards — 4 Actions You Need to Know

The Internet is a great tool for penny stock investors, however, it is also a great tool for impostors as well. Smart investors need to learn how to spot, and stay away from Internet fraud.

Penny stock message boards have become a popular way for investors to share information. While some messages may be genuine, many turn out to be fake, or even scams. Impostors often “pump up” a company or pretend they know “inside” information about products, new profitable contracts, or unreleased announcements. You can never know for sure who is making the posts. These people can easily be paid promoters, company employees, or large shareholders. One individual can easily create the impression of widespread interest in a stock by posting several messages under various names.

If you want to stay away from fraud, you must get the facts. By no means, ever, buy a penny stock based only on what you read on a penny stock message board. And don’t even think about investing on your own in small companies that don’t file regular reports with the SEC. If you do, you should be willing to research each company and check the truth of every statement made about the company. Here are four actions you can take to avoid scams:

ACTION # 1 Get financial statements from the company and be able to analyze them.

ACTION # 2 Verify posts about new products, announcements or new contracts.

ACTION # 3 Call suppliers and/or customers of the company and verify their relationships with the company.

ACTION # 4 Research the management of the company and find out if they’ve ever made money for investors before.

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