Why You Shouldn't Look For a Free List of Successful Penny Stocks Picks

Now, you can find good penny stocks on the OTC Bulletin Board and on the Pink Sheets. It is the "characteristics", or loosely held criteria, that makes these stocks subject to manipulation. The very nature of defining and categorizing them calls for false play. For one thing, the criteria may sometimes be contradictory. For example, there are companies trading for only a few cents with market capitalization of hundreds of millions of dollars, or corporations trading on the Pink Sheets but having share prices of $50 or more.

The Pink Sheets. What is it? It is not a stock exchange. Rather, it is a quoting system that lists stocks tending to be closely held, extremely small, thinly traded, or bankrupt. To be quoted in the Pink Sheets, companies don't need to fulfill any requirements like filing financial statements with the SEC. Most definitely don't meet the minimum U.S. listing requirements for trading on a stock exchange such as the NYSE,. Many of these companies do not file periodic reports or audited financial statements with the SEC, making it extremely difficult for investors to find reliable, unbiased information about those companies.

I like to call the strategy "Hoarding." See, what you find is this: An individual or organization buys up hundreds of thousands or millions of a very thinly traded Pink Sheet stock. He then goes out and used websites, mass e-mails, faulty press releases, and other forms of online optimization. This is called "creating hype." Most of the time, these newsletters offer faulty or misleading information, resulting in investors buying shares in the underlying company. The increased demand pumps the price up, while the original individual or organization doing the "pumping" sells their holdings, for big profits.