Penny Stock WhizzKid

Ian Cassel: the King of Micro Cap Investing!

by Leave a Comment

Ian Cassel is a professional micro cap investor and founder of MircoCapClub.com. Micro Cap Club is an exclusive investing forum where experienced investors discuss mirco caps on US and Canadian equity markets. They also cover some UK and Australian small caps.

A micro cap is defined as a company with a market cap of less than $300 million. Out of the 20,000 public equities in North America, about 50% are micro caps and very few investors follow them.

Cassel developed a keen interest in micro cap stocks when he was a sophomore at college. In high school his parents gave him control of a $20,000 college fund and he opened up a brokerage account. This was in 1997 when the dot-com bubble was in full swing, the perfect time to start trading. Back then it was near impossible not to make money investing in tech stocks. Young Ian rode the wave and made big returns investing in technology companies.

When it came time to choosing a college, he selected a local university that allowed him to work full-time and continue investing. Working for a financial advisor as a receptionist, he experienced the high and lows of the market. When the tech bubble burst, a $120,000 portfolio quickly shrunk to $8,000. During this time Ian was still working as a receptionist and was taking calls from disgruntled clients. This negative experience led him away from becoming a financial advisor towards becoming a private investor and not having the stress of managing clients money.

Later he got involved with micro caps because when some of those tech companies collapsed they became penny stocks. After the crash, his first major investment was XM Satellite Radio which back then was heavily indebted and close to filing bankruptcy. He invested the remaining $8,000 into XM at $1.78 per share, they refinanced their debt and signed OEM agreements with GM and Ford. Over the next 14 months, shorts covering their positions helped it spike to $34! This initial success spurred on his interest in the micro cap space, enjoying the fact he could meet with management teams face-to-face.

Why Invest in Micro Caps?

Historically investing in small high-quality businesses has been proven to be one of the best ways to accumulate wealth. CSRB data from 1927 to 2016 revealed stocks under $114 million market cap significantly outperformed all other market cap classes. These companies are so small and illiquid that institutional investors can’t invest. This gives small astute investors the opportunity to buy early and capture huge returns. Once a micro cap starts executing their business model, stock price increases with liquidity. Later institutional capital can buy shares and that’s where the magic happens. The key is getting in early before institutions.

While the average investor avoids illiquid investments, Ian Cassel embraces them. For example a micro cap worth $50 million on the OTC could trade $20,000-$25,000 worth of shares per day with zero analysts. While on the other hand, a company with a market cap of $500 million would trade a few million shares every day and have a handful of analysts covering them.

How Does he Find Micro Caps Worth Buying?

There’s no secret to finding hidden gems. You’ll need to put in the hours to locate the best long term investments. Some investors use stock scanners while Ian prefers to go through every micro cap from A to Z. Micro caps under $50 million will have no analyst coverage for guidance so investors need to perform their own due diligence – reading SEC filings, financial reports and talking with management. The whole process of going through every company is tedious work but your ability to sift through all the shit to find a needle in a haystack is your edge. When Ian started all the activity online around micro caps was on message boards but that later moved to Seeking Alpha and private investing forums like MircoCapClub.com.

Main Criteria for Investing

  • Intelligent Fanatic – company is run by a visionary leader who acts as an owner-operator with intense focus, integrity and intelligence.
  • Market leaders – dominate a small niche that is growing.
  • Sustainable, profitable and growth – rapidly growing company that can scale their business and self-fund their operations. Share dilution is the biggest fear every penny stock investors faces.
  • Little or no debt – debt can impede growth, normally it comes through high-interest dilutive convertible debt.
  • Clean Capital Structure – low number of outstanding shares, all common shares and a low amount of warrants/options as a percentage of outstanding shares.
  • No Institutional Ownership – discovering great companies early before institutional investors is key to massive upside gains.
  • Immediate Upside – invest when the business is fundamentally undervalued to reduce risk and leverage multiple expansion.

Intelligent Fanatics Capital Management

In 2019 Ian launched his own fund – Intelligent Fanatics Capital Management. IFCM strategy focuses on investing in intelligent fanatic-led businesses with a market cap of less than $150 million. IFCM investors have to sign up for an account at Interactive Brokers. They will manage the account on your behalf – this is known as a separately managed account. The fund is seeking only accredited investors with a minimum of $100,000 to deposit. To my knowledge the fund currently has one holding, Biomerica, Inc.

For those interested in joining MircoCapClub.com, you can join by pitching a 2/3 page investment thesis on your favourite small cap idea or pay $497 for 12 months access. Make sure to follow Ian Cassel on Twitter to get some daily investing wisdom, his quotes are very insightful for aspiring stock traders.

Best Penny Stocks That Pay Dividends in 2020

by Leave a Comment

Normally penny stocks don’t pay a dividend to investors as they are small companies with lower revenues. Financially it doesn’t make sense for these companies to pay out a dividend because they need the capital to reinvest and grow their business. However, surprisingly there are some dividend paying penny stocks under $5 on the Nasdaq and NYSE. The companies picked below are risky investments but at least with a dividend yield above 3% it does slightly lower your risk.

*Make sure to perform your own due diligence before investing, don’t invest just because a certain company has a high dividend yield.

List of Penny Stocks Paying a Dividend
Ticker Company  Exchange Dividend Yield
SXC SunCoke Energy NYSE 7.45%
AMC AMC Entertainment Holdings NYSE 3.00%
NCMI National CineMedia NASDAQ 9.56%
EVC Entravision NYSE 6.99%
DAKT Daktronics NASDAQ 4.76%
RVSB Riverview Bancorp NASDAQ 4.04%
ETM Entercom NYSE 5.48%
EEX Emerald Holding NYSE 10.56%
GLOG GasLog Ltd  NYSE 12.44%
RELL Richardson Electronics NASDAQ 5.74%

Table last updated July 26th 2020

How to Find Penny Stocks Paying a Dividend

The best way to find suitable stocks is using a stock screener such as Finviz. Simply go to Finviz.com and click on the screener tab which is at the top left of the page. Then you be able apply filters to screen through thousands of stocks across all the major markets. They have a free plan that is more than enough for our needs, for advanced filtering you’ll need to sign up to their paid plan. The four main filters to use – Market Cap, Dividend Yield, Average Volume and Price.

  • Market cap is the total value of company’s outstanding shares. For penny stocks the market cap setting should be ‘Micro’ or ‘Small Cap’.
  • Dividend Yield is a financial ratio that is calculated from dividing a stocks total dividend payments to shareholders by its market cap. Typically investors are looking for a dividend yield of at least 3% per year.
  • Average volume is the number of shares traded per day. Penny stocks can illiquid so I only recommend trading stocks that you can easily buy and sell. You should avoid illiquid stocks like the plague, for this setting I wouldn’t go any lower 50,000.
  • Price is set to $5 but you can slightly raise it find safer investment opportunities.

Penny Stock Risks

The majority of penny stocks are terrible companies that struggle to survive financially but there are some diamond in the rough. Most will drop in share price overtime as they fail to become profitable and establish a viable business model. Others will produce explosive returns of 100%-500%. To reduce your level of risk, going with a small cap stock paying a dividend is a strategy worth exploring. For example buying 10,000 shares of a stock trading at $1 with a dividend of $0.05 per share means a return of $500 each year. Over a year, even if the stock drops to $0.95 you’ll be at a breakeven point discounting broker fee’s.

Zed Monopoly Review – Is he a Legit Trader?

by Leave a Comment

Zed Monopoly is a day trader and motivational speaker from Dublin, Ireland. Nicknamed the ‘Irish Wolf of Wall Street’, the trader was interviewed by thesun.co.uk in June 2019 where he shared his trading journey. In the interview he claimed to have turned £9,000 into £220,000 in just 9 months by trading penny stocks. To my knowledge the Sun newspaper didn’t ask for proof to verify trading profits but you never know, his story could be true.

The Dubliner graduated from university with a degree in Business Computing and quickly became disillusioned with the normal 9-to-5 grind. The 26 year old ditched his job at Google to become a full-time trader and mentor. The decision appears to have worked out well as his YouTube channel has really taken off over the past few years, quickly building up an army of 70,000 subscribers. Despite initial success with penny stocks, Zed turned to day trading less volatile stocks such as Nike and Apple.

Strategies

Based on watching some of Zed’s videos, his main strategy of trading earnings reports is simple. Every day before the market opens, Zed reads earnings reports and analysts predictions to judge the potential movement of a stock. Once the market opens, he rides the momentum of a stock for quick profits with trades lasting 5-10 minutes. The psychology behind the strategy is the market typically overreacts to news so Zed can quickly enter and exit trades before the market corrects itself. In theory this sounds easy but it’s difficult to be consistently profitable because you don’t have an edge unless you have insider news on these companies. As well as that, you need a good broker with excellent executions to stand a chance.

Net Worth

Zed Monopoly has an estimated net worth of $400,000. He makes extra income alongside trading from selling courses, affiliate marketing and YouTube ad revenue. Typically stock trading channels on YouTube have the potential to earn decent money because it’s very advertiser friendly. I wouldn’t be surprised if he’s making $5 per 1000 views.

What Broker Does Zed Use?

This has to be one of the most common things he gets asked on a daily basis. To answer your question, here is a list of brokers Zed recommends for day trading:

  • Interactive Brokers
  • Etrade
  • TD Ameritrade
  • Tradestation
  • Tradezero
  • Cityindex (UK only)

3 In 1 Stock Course – Platinum

Currently Zed sells an online course covering penny stocks, blue chips, swing trading as well as access to his discord chatroom. The price is €295 via Paypal with no refunds available. The only way to buy the course is by emailing him directly.

Reviews Online

Overall reviews online highlight the fact there’s a mixed opinion about Mr Monopoly. Everyone on his comments section on YouTube think he’s a legend, others believe he’s a fake trader. On a subreddit about Zed Monopoly, users posted messages questioning his legitimacy as a day trader and that he doesn’t appear to be trustworthy.

Zed Monopoly reddit

Review from a Student

Lewis Crocker uploaded a video to give an honest review of his experience working under Zed as a student. Some people might find it useful but for me it’s very vague and offers limited insight for those looking to invest hundreds of euros into a course. Would be useful if Lewis could provide a more detailed review a few months down the line.

Let us know in the comment section what you think about Zed Monopoly and his stock trading course.

Timothy Sykes Review 2020 – is he the Real Deal?

by 2 Comments

Timothy Sykes is a well-known penny stock trader with a net worth of $20 million. The brash self-made millionaire isn’t afraid to make bold claims and promote himself on social media. His marketing tactics tends to attract haters who enjoy spreading negative energy but Tim doesn’t care, he only wants to inspire and educate the world about trading. Hopefully in this review, I can help you decide if signing up for his service is worth the time and money.

Background

Before I start the review, it’s useful to learn about his background and how he got started with penny stocks.

Born in Orange, Connecticut, in 1981, Tim began trading at a young age when his parents gave him full control of his bar mitzvah gift money! His parents, thinking he would lose it all, wanted to teach him a lesson about money. Little did they know, they created a monster! Tim would later turn that sum of $12,415 into $1.65 million trading 100’s of penny stocks during the dot-com bubble.

Due to his success, family and friends wanted him to invest money on their behalves. This led to Tim starting a hedge fund (the Cilantro Fund) during his last year of study at Tulane University. At its peak, the fund only had $3 million under management because short selling penny stocks isn’t a scalable strategy. It’s possible to make $1 to $3 million per year shorting penny stocks but not tens of millions. He was listed in Trader Monthly’s ”30 under 30” as of the top traders to watch on Wall Street. As you would imagine his unique story got a lot of media attention and featured in season 1 of Wall Street Warriors, a popular reality TV show.

When the series aired, he received hundreds of emails from people wanting to learn about his penny stock strategy. This inspired him to write a book titled “An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund”. (PDF version of the book was released for free online).

After Wall Street Warriors, Sykes continued day trading and later launched his blog timothysykes.com. Due to strong demand, he created multiple newsletters to cater to every trader from beginner to advanced. As of now, Sykes has three newsletters – Tim Alerts, Pennystocking Silver and the Millionaire Challenge.

Click Here to Sign Up For Plans! 

Tim Sykes Newsletter Alerts

Tim Alerts

Tim Alerts is the most basic plan. For $74.95 per month Sykes offers access to the chatroom, daily watchlist of 5-10 stocks and real-time alerts via SMS and email. The only problem is the 4,400+ video lesson library isn’t included with this subscription. If you’re new to stock trading, the training videos are a big loss. Most people also join thinking they can just copy alerts and bank easy profits. This won’t work because penny stocks move too fast. Don’t copy his trades as some gullible followers have done before. The alerts are there for guidance to help people become independent traders and thinkers. Learn by yourself how to do technical analysis, scan for stocks and build watchlists.

Pennystocking Silver

For new penny stock traders, Pennystocking Silver is the most suitable plan. It includes features from Tim Alerts plus access to a massive library of 4,400+ video lessons and new weekly video lessons. While it would be time-consuming to watch all of the lessons, the lessons are full of wisdom. This is why Tim recommends studying the past to profit from the future! The patterns he teaches can be predictable and tend to repeat themselves a lot.

Millionaire Challenge: Is it Worth the Price?

The millionaire challenge is Tim’s premium course, designed to provide more advanced training to students serious about investing in their education. Be warned though the challenge is pricey and costs a whopping $6,000. Before joining, you will need to apply for an interview to asses if you’re a fit for the program.

Tim Sykes Millionaire Challenge explained

For $6,000 you receive:

  • Millionaire Challenge DVDs: access to all of Tim Sykes DVD’s, (14 last time I counted) and a copy of Trading Tickers, a highly rated DVD created by Tim Grittani.
  • Weekly private webinars from millionaire students such as Mark Croock, Tim Grittani, Tim Lento and Michael Goode. The webinars and chatroom help minimize the learning curve, as opposed to going it alone.
  • One year membership to Pennystocking Silver which contains 4,400 video lessons, his daily trade alerts and watchlists.
  • Private chatroom just for challenge students which isn’t full of beginners asking simple questions.
  • Lifetime discounts on any other product purchases and conferences.

I recommend signing up for Pennystocking Silver first because it’s more cost-effective for new traders starting off. It doesn’t make to sense to spend $6,000 without even knowing the basics of penny stocks.

Timothy Sykes DVDs

Tim has made $5.14 million from day trading alone but now earns the majority of his income from running a trading education business. The DVDs are expensive but mandatory if you want to learn his strategies. Check out his store for promotional codes and it might be worth searching eBay to find old students selling DVDs. In the past, DVDs could be downloaded for free on torrent sites but are no longer available. Below is the latest list of DVD’s to purchase from the Profit.ly store.

  • Pennystocking
  • Pennystocking Part Deux (in my opinion his best DVD)
  • Shortstocking
  • Tim Raw
  • Tim Fundamentals
  • Tim Fundamentals Part Deux
  • Tim Tactics
  • Read SEC Filings
  • New Rules of Pennystocking
  • Learn Level II
  • How to Make Millions
  • Spikeability

What is Tim’s Strategy?

Sykes main strategy involves short selling over hyped penny stocks to profit when they fall in price. A strategy that can be risky unless you know what you’re doing because these stocks are volatile. Tim uses technical analysis to identify chart patterns that improve your odds of success in the market. An example of a chart pattern he likes is called the first red day pattern. If a stock has been green for several days and then closes the day red, many investors will soon sell causing the stock to fall. If you short on the first red day, it has potential of multiple red days meaning more profits. The key here is waiting for momentum to shift before you make your move. Sykes also likes to profit from buying breakouts, he runs a special newsletter ‘Supernova Alerts’ to focus on this lucrative strategy. Overall his techniques are more suited for smaller accounts, not those with millions of dollars to invest.

Is Timothy Sykes a Scam?

As you would expect there are a lot of traders skeptical about his story. Over the years Tim hasn’t had any trouble attracting hater because of the way he advertises to get new students. His Instagram account advertises his extravagant lifestyle, pictures of flashy cars, stacks of money and exotic vacations. A lifestyle, everybody wants to live. People often wonder if Tim is legit? Are his stock trading profits fake? Does he only make money selling products? I personally don’t think Timothy Sykes is a scam. Just because he makes more money teaching instead of trading, it does not make him a fraud. He has helped create multiple millionaires through his teachings, while he’s not solely responsible for their success, he played a big part in getting them started.

Examples of successful students:

  • Michael Goode – started off as Tim;s first hater publicly criticising him online but then later became his first millionaire student.
  • Tim Grittani – Grittani is a day trading superstar who has turned $1500 in $6 million in 8 years.
  • Steven Dux – Dux is a very intelligent trader with an analytical mindset that has been crushing it for the past four years. Dux has turned $27,000 into $5 million in 4 years, this guy is a machine!
  • Mark Croock – Croock has gone from student to teacher and is now apart of the Millionaire challenge as a mentor.
  • Tim Bohen – the lovable rogue was an early case study in how trade successfully as a side hustle. Bohen is now the lead trainer at StocksToTrade.
  • Roland Wolf – Roland came out of nowhere back in 2017 when he turned $4,000 into $170,000. Another awesome story, that inspires you to study harder.
  • Kyle Williams – one of his latest success stories to pass the six-figure milestone, Kyle has been on fire lately and will surely reach one million dollars within the next two years.

Timothy Sykes is the real deal, he’s been interviewed by the likes of Larry King and Steve Harvey. His trading profits are real and have been verified on Profit.ly. He can have $1,000 days, but the real question is can he teach you to make the same kind of money? Your overall success depends on how determined you will be learn his strategies inside out. Many members join with such high expectations of becoming his next millionaire student, but the reality is they won’t come close. I don’t like being critical of Tim mainly because he’s a cool guy, works his butt off and brings transparency to the corrupt world of penny stocks. To appear less gimmicky he should tone down his advertising and be less flashy with material objects.

How Much Money Will You Need to Start?

It’s advised to start of with least $2,000 because broker fees will kills your profits. To avoid the dreaded pattern day trader rule you need to deposit $25,000. To get around this rule most people open up multiple brokerage accounts to place more trades. Splitting $10,000 into five different accounts and you can make 20 trades in five business days. Avoid using offshore brokerages they’re not reliable. Etrade and Interactive Brokers are the top two broker Sykes tends to recommend to students. Ultimately it doesn’t matter what broker you pick as long as you get solid trade executions and cheap commissions.

Conclusion

Love him or hate him; Timothy Sykes is here to stay. While you may not like his personality, he brings transparency and entertainment to finance. While his courses are expensive, this is the price you have to pay to learn from the best traders. Join for the education and not to get rich quick. Surround yourself with experienced traders and you will become a better trader yourself.

Top 5 Penny Stock Screeners in 2020

by Leave a Comment

Day trading penny stocks is just as much an art as it is a science. If you compare successful traders you will find that, while there may be similarities, no one system or approach is identical. Different investors use different data points to identify stocks they think could be suitable to play.

Some like to trade purely on fundamentals, examining management history, balance sheets, and actual reports to find stocks that are presently undervalued and likely to rise in the future. Other traders prefer a more technical approach, focusing on indicators such as moving average, market cap, and volume to determine when a price breakout is imminent.

In the past, many traders spent days scouring the internet looking for stocks that fit their specific criteria. As one may imagine, the sheer number of publicly traded companies can make this process arduous and time-consuming. Because of this, stock screening programs began to rise in popularity.

A stock screener is a program that allows traders to filter companies based on chosen criteria. For example, let’s say an investor was looking for small-cap companies in the mining sector currently trading at their all-time low – they would simply enter in said criteria and within seconds be presented with a result set.

As it stands, traders have many options to choose from when it comes to stock screeners. Unfortunately, not all are created equal and some offer clear advantages over others. Here we will look at the top 5 stock screeners for penny stock traders.

5. Market Watch Penny Stock Screener

Over the last decade, MarketWatch has become one of the more popular websites that investors use to check stock prices, view news releases, and read op-ed articles on the current state of the market. 

One of the lesser-known functions offered by MarketWatch is its free stock screener software. This software allows users to filter stocks based on a set of basic technical and fundamental criteria including P/E ratio, market cap, stock price, volume, and many others.

This stock screener is more likely to be useful to mid to long term investors. Day traders or scalp traders are much less likely to find this software useful as the filter criteria are somewhat limited. Nevertheless, it is still a quality free tool.

4. Finviz

Finviz is another great free penny stock screener that offers much of the same functionality as the MarketWatch counterpart, but with a much easier to read and intuitive user interface. Unlike MarketWatch, Finviz shows a live feed of the user’s result set, complete with candlestick charts.

For those who require more functionality, Finviz offers an Elite version that currently costs 24.99 per month. Finviz Elite allows users to break down search results into an even more detailed result set by offering certain filters not included in the free version including technical indicators such as RSI, MACD, and over 100 others.

3. Stock Rover

Created in 2008, Stock Rover is a powerful stock screener that offers both Technical and Fundamental filter criteria and a large, wide-reaching, database of publicly traded companies. It has generally been regarded as one of the most intuitive to use stock screeners on the market, offering a dynamic user interface and is easy to use for both beginners and experts. 

One thing that sets Stock Rover above the two previously mentioned screeners is the wealth of filtering metrics available – the company claims to offer over 500 technical and fundamental indicators. Stock Rover also offers broker integration, allowing users to make trades within the software itself.

While a free/trial version does exist, it offers very limited functionality compared to its paid version, which costs $7.99 per month.

2. Black Box Stocks

Unlike other screeners on this list, Black Box Stocks Screener puts a great deal of emphasis on its lively trading community, offering both voice and text chat rooms which are usually quite full. The software also boasts a nice, easy to read, user interface, featuring built-in metrics such as a volatility indicator and institution-grade live charts. The software also has a built-in alert feature; while some users claim to enjoy the alert system, others complain that the software sends out far too many alerts, and reducing alerts to a desirable level can be difficult.

The software also offers users its proprietary volume ratio tool, which can be particularly useful for people trading low float, small-cap stocks – something that penny stock traders may find particularly handy.

Although Black Box Stocks presents itself as one of the premium stock screening tools on the market, it is not cheap. Monthly subscriptions come in at $99.97 per month or $959 for the year.

1. Trade-Ideas

For over 15 years, Trade-Ideas LLC has offered investors the premier stock screening software. The platform allows investors to develop a highly customizable set of filter criteria to fit their exact trading strategy. 

Like other screeners mentioned on this list, Trade-Ideas supports a wide array of technical and fundamental criteria, offering investors a qualitative and quantitative view of the market. It also hosts live chat rooms where investors can discuss their trades and speculate on future market conditions. Unlike some of the other screeners mentioned on this list, Trade-Ideas offers a highly integrated interface for day traders, with fast real-time data, AI algorithm trading options, and integrated broker options. 

Trade-Ideas does have a free version, which offers limited functionality, as well as two paid plans- the standard plan at $1068 per year or the premium plan at $2268 per year. While this price point might seem steep to some, it is well worth it. The range of functionality, filter and criteria, and customizability make it the premier stock screening tool for a reason.

How Penny Stock Pump and Dump Schemes Work

by Leave a Comment

Pump and dump schemes are a type of securities fraud that involve artificially increasing the price of a stock with false or misleading statements, in order to later sell at a higher price. Once the seller dumps his stock, this causes the price to fall drastically, leaving the new investors with a loss. The scam is most commonly associated with penny stocks and has more recently become popular with cryptocurrencies.

Penny stocks are targeted for pump and dumps by fraudsters as they are easier to manipulate because of their low float, meaning it doesn’t take a lot of buyers to increase the price. The scheme starts with someone accumulating a large position in a company and then finding an effective medium to advertise the stock to potential buyers. The stock is hyped as “the next big thing” with details of an upcoming announcement that will cause the shares in “soar in price”.

Example of a Pump and Dump – Jammin Java

In 2o11, former CEO of Jammin Java, Shane Whittle organized a $78 million international pump and dump scheme of a coffee company originally founded by Bob Marley’s son. In April 2011, the companies stock price traded at $0.50 per share, by the middle of May the stock price reached $5.17 before collapsing. By the end of 2011 the price fell bellow $0.30 and nearly ten years later the company now trades for $0.00020 per share!

JAMN - pump and dump fraud

Promotional Techniques

In the 1990’s cold calling, message boards and email was the best way to promote investment opportunities. Two movies that do an excellent job at depicting how cold calling works is the Wolf of Street and Boiler Room.

Boiler rooms were outbound call centers full of sketchy salespeople pitching stocks to strangers. Typically a salesperson made over a 200+ calls per day looking for suckers to buy. 90% of people hung up while the remaining 10% would give someone 30 seconds of their time to hear their pitch. Boiler room operations slowly died out as the SEC clamped down and their practices became more widely known.

During the late 90’s/early 2000’s, message boards was a great place to promote stocks. 15 year old Jonathan Lebed was the first minor to get prosecuted by the SEC for stock manipulation through the help of internet forums. In high-school at the time, young Lebed published false information about stocks he owned on Yahoo message boards through dozens of fake profiles he created. He aggressively recommend companies as strong buys, everyone who took his advice and bought pushed the stocks higher. Lebed would later dump his shares for massive profits, sending the shares crashing back to reality. In the space of six months, he earned $800,000 and was later ordered to pay back $285,000 of his illicit gains, leaving the youngster with half a million dollars.

The rise of the internet in the 2000’s took stock manipulation to new heights. Stock promoters setup professional websites to build up massive email lists to promote their latest “free stock picks”. Awesome Penny Stocks at the one time was the biggest penny stock promotional companies in the game. Over a span of five years they promoted 38 stocks that cost investors tens of millions in losses. The person allegedly behind the website was a Canadian man John Babikian. Nicknamed the Montreal Playboy, he acquired a $100 million fortune from his promotional activities. He fled Canada in 2012 to avoid tax evasion charges and his whereabouts are still unknown.

Conclusion

Penny stocks are risky to buy if you’re an inexperienced trader. Never buy a stock based on a “hot tip” from a stranger on the internet. Always do your research and form your own opinions, 5 minutes of research is enough time to discover if a penny stock is a legit company. Remember if it sounds too good to be true, it probably is.