OTC Penny Stocks And OTC Bulletin Board Stocks - Never Fall For This Nonsense!!!

I’ve posted an article on OTC Stocks on this website already, so just to recap:

Over-The-Counter (OTC) trading is trading financial instruments such as stocks, bonds, commodities or derivatives directly between two parties. There are no stock exchanges like NYSE, NASDAQ, etc. involved. That’s why this kind of trading is called over-the-counter because that’s what basically happens.

The phrase “over-the-counter” can be used to refer to stocks that trade via a dealer network as opposed to exchange trading which occurs on futures or stock exchanges.

Now there are freaks and lunatics out there that spam people with emails with the intention of luring and enticing them into investing in disasterous equity that will, more often than not, diminish their investment to almost zero.

On June 5, 2006 I received the following email:

June 5, 2006

Trade Date: Tuesday, June 6th, 2006
Company: BioElectronics Corporation

Symbol: BIEL
Price: $0.25

IS MOMENTUM BUILDING FOR THIS STOCK? CAN YOU MAKE SOME FAST MONEY ON IT?
RADAR BIEL FOR TUESDAY’S OPEN RIGHT NOW!!

THE ALERT IS ON!!!

RECENT NEWS HEADLINE: (GO READ ALL THE NEWS ON BIEL RIGHT NOW!)

I want to spare you this because it’s just a waste of valuable and precious time. This is a typical OTC Stock and the chart, even as of today, August 21, 2008, says it all!

Ever since it was trading at $0.25 on June 5, 2006 it dropped and is trading today, August 21, 2008 at $0.015. That’s a ludicrous 1.5 cents. In 2 over years this stock never made it above 25 cents and this junk someone tries to palm off on you as a great investment.

The 5 year chart looks even worse. In all this time BIEL never made it above $1.50 and went downwards ever since never to see it’s all time high again.

No need to say that this stock would’ve make you a catastrophic loss!!!

On June 7, 2006 I got another email of this kind:

June 7, 2006

You may not be aware of A B S Y , but you should be, because this company
represents a terrific profit opportunity for early investors.
Can you make some fast money on this one? Put it on your radar now.
Breaking news alert issue - big news coming.

Trade Date : 7 Jun 2006
Name : ABSOLUTESKY INC
Ticker : A B S Y Profits of 200-400 % EXPECTED
Yes, it looks like the momentum has started up again.
Current Price : $0.95
SHORT TERM 2 DAY PROJECTION : $2
Market Performance : S T R O N G B U Y

A B S Y should be one of the most profitable stocks to trade.
It is only a matter of time before it is released out into the investment
community and they take it to the moon.
Whatever you do WATCH A B S Y …
When this Stock moves - WATCH OUT!

ABSY was still trading at $30 in March 2006. And now, as of August 21, 2008, it dropped all the way down to 3.3 cents. What makes one believe that this can possibly be a serious and solid investment?

This is again an OTC stock and just take a look at this (3 year) chart:

One can’t even make out a decent trading pattern on this chart! So here’s a 1 year chart so that you can at least see a bit of a chart pattern!

Now the short-term projection was that this, oh so wonderfull and profitable stock, would shoot up to $2 in two days.

What ludicrous nonsense! Not even 2 years let alone 2 days later it hasn’t traded anywhere near $2 yet.

Now trading at 3.3 cents, never mind 2 dollars, a 200 - 400 % profit looks different! Wouldn’t you agree?!?

Tuesday, July 11 was even better when I received the following Stock Alert:

AMERICA ASIA PETROLEUM
Symbol: AAPM
Price: $0.105
SALES AND EARNINGS!!!

OIL - IS THERE A HOTTER SECTOR TO TRADE?!

FIRST QUARTER REVENUE of $14,638,524!!! (Go Read The Full Story and All The News Now!)
CARSON CITY, Nev., July 7/PRNewswire-First Call/ - America Asia Petroleum (OTC Pink Sheets: AAPM), announced today results for the first quarter ending March 31, 2006 at $14,638,524, unaudited. For the three months ended March 31, 2006, earnings before interest, taxes, depreciation and amortization or EBITDA, totaled $447,247 with a basic and diluted earnings per share of $0,005.

How can anyone take such an investment offer serious? That’s not investing, that’s gambling!!! An EPS of $0,005 is ludicrous! So is the stock by the way. Not even 3 months later on October 5, 2006, this stock is trading at 0.0012 cents. It’s not even worth one single little cent anymore.

Since July 11, 2006 it hasn’t seen any new highs yet not even mentioning the $0.105 at which it was first suggested to me! And right now, on 21 August 2008, I can’t even find the chart anymore on Big Charts to see where it’s trading now.

Maybe it’s off the market already which is quite possible. This happens often with these otc penny stocks. They are nothing but junk! Period!!!

The scam behind this is manipulation! If enough unsuspecting investors are enticed to fall for this temptation then the speculation is that XYZ junk stock will rise. Once a certain price is reached the stock quickly gets sold by the manipulating organization and, before you catch wind of the scam, you sit on a total loss.

So be extremely careful if someone tries to persuade you to invest in stocks like these. I know that it is very tempting to buy OTC’s because they are so dirt cheap. And yes, if everything works out for you and your 20 cent penny stock shoots up to $2, then you will make a killing of a profit. But the question is IF(?) ! And this IF can wipe out your entire investment in no time. That’s how risky OTC and Penny Stock Trading can be.

And as you can see in the examples above, this talk about great cheap stocks, hot penny stocks, best otc stocks with extreme growth potential making you massive profits are nothing but empty promises. They are not even worth being touched with a barge-pole!

So the best advice I can give you from my own experience is to ignore the temptation if you come across headlines like “Where Can I Trade Stocks For Cheap”, “Dirt Cheap Stocks With Growth Potential” or other sorts of persuaders and tempting offers.

This is not the stuff decent and high quality investments are made of.

It’s gambling. Not investing!

Yours in Careful and Successful trading.

Ricky Schmidt