It is surprisingly common to find press releases about penny stocks. For how little is known about most of the companies on the pink sheets there is a lot of information released in a lot of unheard places. The truth is the press release is little more than controlled information by the corporation itself in hopes of catching the attention a novice investor or penny stock broker. The information is released to companies that pose as press releases so investors will think they’ve found real information. In fact this information is usually true, but often outdated or exaggerated. Anything real has long been priced into the value of the penny stock.
A great way to validate press releases is to check if similar sentences can be found anywhere else using a internet search. It is very unlikely that multiple press releases would hit the internet at similar times on thinly followed companies. Another way to help validate a press release is to call the investors relations department and ask for facts related to the article. Odds are the investor’s relations personnel aren’t even familiar with the press release because a totally different department (marketing) deals with this type of propaganda.
For a small company, you are more likely to find useful information in an interview or industry trade magazine. An article written about a new technology may give some insights to the company from a perspective not related to finance. The purist of the technology or process is a lot less likely to have any skin in the game on that particular penny stock.
Be careful with even trusted sources of news. Some of the bigger names are known for picking up these phony press releases and running them as news to fill some white space on their pages or on their web sites. They’ll retract the information later if someone proves the story false, but that won’t do you any good if you’ve already placed a trade on it. Now, despite all these risks, if you’re still interested in trading penny stocks you can check out some of the more reputable online sources such as the buy penny stocks guide, which is a pretty good place to start for the neophyte penny stock trader.
From time to time, I allow my reader’s to make guest posts. This is one of them. One of the things that I think my guest poster failed to mention is that press releases can be sent out by anyone and relatively cheaply. It’s my feeling that if you find a press release regarding a penny stock, it’s most likely “advertising” sent out by those trying to manipulate the stock’s price.
Related posts:
Recent Comments