Author and public speaker Peter Leeds, an expert on penny stocks to buy, warns investors to avoid what he calls "story stocks." Many penny stocks have a great story, and investors buy significantly overpriced shares, without looking at the penny stock's fundamentals. Usually very weak penny stocks not only have, but need, a compelling tale to get investors to buy, since the company itself is often so fragile.
Raleigh, NC -- (SBWIRE) -- 04/24/2012 -- As reported by Seeking Alpha, Sunpeak Ventures (SNPK) has been valued at $725 million after hundreds of dishonest promoters pumped shares through the roof, by making various claims in their financial newsletters. SNPK, however, had only $3,562 in revenues at the time, and besides the push to buy from the flotilla of promoters with hidden motivations, the company itself had absolutely nothing going for them.
Their headquarters, claims Seeking Alpha, looks more like a garage than an office, and their vitamin supplement is the same as a publicly available one you could currently buy on shelves of CVS for one third the price.
"This is just another sign of promotion of penny stocks," explains Peter Leeds, author of "Invest in Penny Stocks," and founder of the world famous penny stocks to buy newsletter. "Many promoters are making claims and providing misleading statements on one side, while naive investors buy on the other side. It's a mess, and while the promoters will make a lot of money, the investors who buy penny stocks like this will get burned, as they always do."
Asked how the investors who do buy shares get hurt, Leeds explains that when the promoters are done with this one, they walk away and shares tank.
"The best way to avoid costly promotions in penny stocks is to not trust 'story stocks.' Any time promoters want you to buy certain penny stocks, they find or fabricate some seemingly incredible story, like penny stocks working on a cure for cancer, or an engine that runs on gravity, and they push shares until you buy."
"How does the story end? The same way it always does - with penny stocks collapsing in price in an instant. Investors may buy and see some profits, so they buy more and see a little more profit. They may buy and buy and buy all the way up... but then they take a look one day and their profits are gone, and they've dumped much of their hard earned money into it."
Asked what makes him different from the penny stocks to buy promoters out there, Leeds states that he never promotes any penny stocks. Nor does he or his team take any form of compensation from penny stocks to buy they profile. As well, the penny stocks to buy that they discuss are fundamentally solid, financially strong investments, unlike the garbage penny stocks being promoted by the dishonest players in the industry.
Leeds also shares his top pointers for investors in penny stocks to protect themselves:
- Never buy pink sheets companies
- Never follow free penny stocks to buy newsletters
- Never buy penny stocks with a "good story" unless they also pass detailed and thorough analysis
About Peter Leeds
Publisher of the Peter Leeds penny stocks to buy newsletter, author of "Invest in Penny Stocks," and public speaker on topics such as penny stocks to buy, Leeds works with a 6 person penny stocks team. With over 32,000 subscriptions sold, their newsletter is one of the most popular financial publications in North America.
Leeds has been interviewed by all top media about penny stocks, from Manhattan to Moscow, and is easily available through his public Facebook page to answer questions.