“The Next Big Thing: 3 Penny Stocks You Must Buy Now!”

Friday File look at some new penny stock teases

By Travis Johnson, Stock Gumshoe, October 7, 2011

I’ve been getting an ad from the folks at Penny Stock Publishing about a new (or newish, at least) letter called Penny Stock All-Stars. Edited by Gordon Lewis, and claiming to be an antidote to all the pump-and-dump penny stock letters out there that either take money from companies to write about their stock, or trade in the stock themselves as they’re manipulating it.

Which is nice, but it’s not so unique from most of the “legitimate” publishers — whether or not you like the promotional practices or stock picks of folks like Agora, Stansberry, or the Motley Fool, they’re pretty clearly making money (and lots of it) from subscriptions and advertising, not from pump-and-dump trades at your expense.

Which is as it should be, that’s why we follow the same general rules here at Stock Gumshoe that are standard with most of the publishers (don’t take money to write about stocks, and don’t trade stocks within a few days after we publish articles about them, on the off chance that we’d be profiting from the attention that we can sometimes bring to a stock — yes, we’re small, but even small websites and newsletters can move a penny stock pretty easily).

But anyway, I don’t know anything about this letter, other than the fact that it seems pretty new — and that they’re focusing on what they call “penny stocks,” which for some people means teensy weensy microcap stocks that actually trade for a few pennies but for most folks means stocks that are small caps (under $500 million or so in market capitalization) and trade for less than $5 or $10 — the kinds of stocks that are routinely ignored by institutional investors because they’re too small to trade or research efficiently.

Of course, us little guys have no such problems — which can theoretically give small investors an advantage if they’re willing to dig into little stocks, since you can sometimes find great operating companies or growth stories that investment banking analysts would have long since publicized if they were large enough to get that kind of attention. That, at least, is the argument behind pretty much any small cap newsletter, and the reason that many of us hear the siren song of the penny stock from time to time — the smaller they are, we hope, on bended knee and with ...

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