Is Your Penny Stock Newsletter Lying to You? Published on Friday, October 12th, 2012 By John Whitefoot for Penny Stock Detectives I subscribe to a number of (so-called) free online penny stock newsletters. Not for potential investing ideas. These newsletters don’t profile stocks they’ve selected—because they don’t research any stocks. Allegedly, these newsletters are promotional pump-and-dumps subsidized by an interested third party who wants to abandon their holdings into the frenzied melee. In essence, pump-and-dump newsletters are important because they show you what bad penny stocks look like, although not intentionally, of course. I’ll refrain from mentioning the actual newsletter, but if you were able to check out this example’s web site, you’d see they claim to be “the most trusted free newsletter in the world.” Why? Because, “every single one of the stocks we have featured in the past 2 years soared dramatically.” An unbelievable claim when you consider they released their, “first pick ever” on October 2, 2012. What’s more, their site claims to have made triple-digit gains on previous selections. Not only that, they calculated their percentages incorrectly. A supposed 290% gain is advertised as 375%; a 457% gain is heralded at 500%. How can you trust a penny stock newsletter that can’t even figure out basic math on imaginary picks? For a newsletter that just released their first pick, it’s astonishing to see how many testimonials they have, too. I suppose it’s all a moot point; not unlike their first penny stock pick. I’m not saying TagLikeMe Corp. (OTCBB/TAGG) isn’t a penny stock worth investing in. But, it certainly deserves to be researched a little. But, why research a penny stock that is “the best of all social media puttogether, and could some day soon give Facebook and Google some serious competition!” Call it a hunch. If key statistics matter, you may be interested to know that TagLikeMe has no revenue, earnings, book value, or cash per share. Granted, the company does have a lofty $8,000 in cash and only $326,000 in debt. It also has 331 million outstanding shares. So, you should be able to get a position if you want one. What are you getting a position in? If you believe this newsletter, you’re buying into a penny stock that is hotter than Apple. Inc. Apparently, it’s a better deal because it’s an online company that is still small. I can’t really make out exactly what the newsletter is trying to convey; other than the fact that I need to jump in right away and accumulate. You might have to wait though. One week after the launching of this pump-and-dump newsletter, the British Columbia Securities Commission halted trading in TagLikeMe’s stock. The securities commission noted that over the previous week, TAGG experienced a significant increase in trading volume; from virtually nothing to 467,202,800 shares. Of course, there were no changes in the company’s affairs that warranted such an increase.
Not surprisingly, no one at the company is aware of any promotional campaign that might be responsible for the increase. I’m certainly not saying TagLikeMe knew about the pump-and-dump campaign, but I am saying it’s a statistical impossibility that a penny stock with nary a heartbeat could blindly put out its first socalled press release on the same day a pump-and-dump is launched on said company. Since then, the company has put out one fluff press release each day. Almost, one could deduce, to help the momentum of the unknown pump-and-dump newsletter. Making money is the end game of investing. Not only is it important to find the right penny stock to invest in, but it’s equally as important to know when to take a position. This takes patience. Pump-and-dump newsletters live and breathe on anxious investors looking to get in ahead of the curve; even when the outlook is terrible. No matter what lens you view TagLikeMe through, there is no reason to jump in with reckless abandon. The company has virtually no money, no revenue, and right now, no real product. The company also said it needs an influx of cash to maintain operations. (Source: “FORM 10-Q/A FOR TAGLIKEME CORP.,” Yahoo! Finance August 21, 2012.) An optimistic penny stock investor might wait patiently to see if the company can resolve these basic issues. A realistic penny stock investor would just move on. Who knows, maybe TagLikeMe will one day present itself as a good investing opportunity. It isn’t today. What penny stock investors need is an unbiased newsletter they can trust. Each day the Penny Stock Detectivesgurus use their investing experience and insight to highlight fundamentally sound penny stocks with excellent potential. At Penny Stock Detectives, we believe that penny stocks, when rigorously researched, offer investors great opportunities to significantly grow their wealth. We Told You So… Sometimes, even penny stocks with excellent long-term outlooks can pay off in the near term. On October 3, 2012, Sasha Cekerevac wrote about sectors to consider for long-term investing. Long-term investing is, he said, “about being in the right stocks as they go through a period of strong corporate earnings growth.” (See: This Stock Just Doubled Its Net Income.) Fonar Corporation (NASDAQ/FONR) is one such penny stock. This medical device supplier announced recently that earnings for fiscal 2012 were up 110% year-over-year at $6.9 million, or $0.91 per share. Total revenue increased 19% to $39.4 million. When first profiled by Cekerevac on Wednesday, October 3, 2012, Fonar was trading at $4.60. On Tuesday, October 9, 2012, it hit an intraday high of $6.60; for a short-term gain of 43.3%.