Beware of Penny Stock Scams

Written on 19-10-2007 4:14 pm by Craig

Doubling Stocks - A Penny Stock Scam?

Have you heard of Doubling Stocks?

This has been sweeping the internet lately. Here is the basic concept: Two guys named Michael and Carl developed a stock trading robot (a computer program) that they named "Marl". It works by analyzing stocks using technical analysis and generates stock picks. These stocks are supposed to double in price.

How has it performed?

According to the website...

Since its introduction in early 2007, Marl has been responsible for creating 86 millionaires and 13 multi-millionaires

For a one time fee of $47, you can get his weekly newsletter that will show you just one of the stock picks generated by Marl. The problem? The stock picks are all penny stocks!

Is this legitimate?

Does it really work?

Or is this another penny stock scam?

How Penny Stock Scams Work

For those new to trading, here is how the classic penny-stock-pump-and-dump works.

  • First, they begin to tell you how great XYZ company (a penny stock) is and how the price is going to skyrocket. They do this by sending out mass emails or by advertising all over the web.
  • People buy and the stock rises.
  • The crooks dump their shares for a fat profit and everyone else is caught holding shares of a worthless company.

So, does Doubling Stocks fit into this classic penny stock scam?

Well, since it was only a one time fee, and because it has become so popular, I signed up to see what the fuss was about. After I signed up, I got an email from Michael with a link to a pretty good e-book about trading stocks. This wasn't even mentioned on the sales page.

I Get My First Stock Pick!

The next day, I got my first stock pick in my inbox. Ticker: NLIA. I was surprised at all the fundamental information that was in the email. Apparently, the stock picks are generated by a combination of fundamental and technical criteria.

Here is a chart:

doubling stocks stock pick

You can see what happened. I got the stock pick via email on the 15th. Then, the very next day, the stock gapped up - but then sold off. So the million dollar question is this...

Is the reason the stock gapped up due to the company sending out massive emails to its subscriber base and then the stock gapping up because of all of the subscribers buying the stock the next day?

Are the trader(s) behind this buying their shares before the email goes out then dumping their shares off to their subscribers the following morning?

See, that's the problem with these types of penny stock services. How do you know if these guys are really good at picking penny stocks or if it is just one big scam?

It is very possible that this is a very legitimate operation. Heck, on the sales page, it shows their computer setup, gives a phone number and they even give out their address. Also, traders are invited visit him. From the website:

Michael invites all of his subscribers to pop by anytime they are in the area. Monday to Friday, normal working hours.

I am certainly not claiming that these folks are scam artists. But, when you give out stock picks that just happen to be penny stocks, you will be viewed with a lot of skepticism. I'm sure they have run into their share of critics.

The Bottom Line on Doubling Stocks

I wouldn't recommend that you sign up for the Doubling Stocks newsletter. In fact, I wouldn't recommend that you trade penny stocks, period. There are just too many "dirty dealings" going on is this area of trading. Leave it for the traders with money to burn.

But I'll tell you this much. I am sure going to enjoy the heck out of watching these stock picks!

Written on 23-10-2007 11:05 pm by Craig

Market Myths Exposed - 3 Part Video Series

Elliott Wave International is putting out a 3 part video series that debunks some widely held myths including:

  • Why company earnings alone can't drive share prices up or down.
  • Why Economics 101 does not apply to the financial markets.
  • Why do charts of the world’s markets look so correlated?

According to the website...

Market Myths Exposed is one of the most substantial free resources we’ve ever given away to Club EWI.

They usually put out some pretty good articles so these videos might be worth watching.

Check out the Market Myths video series here.

Written on 26-10-2007 5:54 pm by Craig

Leaving for a 7 Day Caribbean Cruise

It's official, my vacation has started...

On Sunday, My wife and I will be leaving for our annual 7 day cruise in the Caribbean. We will be sailing on Royal Caribbean.

Here is a picture of our ship:

Mariner of the Seas Cruise Ship

This is the exact ship that we went on last year. We will be going to different ports of call this time including Cococay, Bahamas; Charlotte Amalie, St. Thomas; Philipsburg, St. Maarten.

I will reply to all of my emails when I get back.

Have a great week!

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