the definitive guide to penny stocks on the web
It really is true. There are sites all over the web that are paid to hype stocks. Many companies are paid in stock to hype a company. So, while they are telling you to buy, they are most likely selling their stock right back to their readers. This is dishonest, devious and unfair. However, you can tell by reading any disclaimers that the site has. Most sites will (in their very, very small print) admit that they may hold shares, may have taken payment, and may be selling their shares right back to you.
Too many sites out there 'pretend' to be informational, pretend to be looking out for you. They are not. That's why they are free. They are not doing this for their (or your) health. They are spreading the news about a stock because they are getting paid. This is the same exact thing that the big brokerage houses do.
Big brokers also take indirect payments. During the tech boom, did you remember the Buy recommendations that were flying all around, even as the bubble burst? We remember one great example where a major brokerage firm had a "Strong Buy" recommendation on Buy.com's stock. This, after the bubble burst and the stock was heading down. That "Strong Buy" was still on the stock even after it traded for less than one dollar. Then, and only then was the recommendation removed. Why? The broker finally realized that Buy.com no longer had the cash or the means for any further business that would benefit the broker. That's when they removed the "Strong Buy" recommendation. They were BIASED! It was only after they knew they would make no more money off of the company that they told their clients to sell.
If you were Buy.com and you had to choose a broker for a business transaction, which would you choose? The many brokers telling their clients to sell, or the one with the Buy recommendation. Of course, the one with the Buy. That's why they had their "Buy" recommendation listed -- to capture business. They did NOT have their client's best interest at heart.
Most online recommendation sites are just that... biased. They either own shares or are being paid directly for their "Buy" recommendations. It's a sad story, but not one that you need to fall for. If that website does not say that they receive NO PAYMENT from the company (or holders) for their recommendations, then you need to stay far... far away. They are biased.
In our Compare Penny Sites section, none of the newsletters we mention receive direct or indirect payments from the companies or holders that they profile. In most cases (such as FalconStocks.com and PeterLeeds.com), these companies also guarantee that they do not own the shares that they tell you to buy. That is just as important because you know that they are not buying shares, then (and only then) telling you to buy while they sell into the rising price.
Visit our Compare Penny Sites for more information on these online investing sources.