Are you looking for that next hot stock market tip that is supposed to make you rich? Well, stop looking and think again. Stock tips supposedly give you the “inside scoop” on the next potential hot stock play so you can buy in when the stock price is low but before the stock takes off. Then sell when it’s high – making you a nice profit. In theory, it sounds like a good stock trading strategy. If it only worked that simple.
Know When to Buy
The value of an actual stock tip depends when you received it. You may think you are getting in on the stock tip before it’s about to take off, but in reality the people who are releasing these tips have already purchased a large position at a lower price. More then likely, as you are buying in – they are selling their positions! The real effectiveness (and profit) of a stock tip will depend on how many people jump on the wagon and ‘buy in’ after you have already done so.
Spam probably wouldn’t be sent out if there wasn’t some kind of return on it, right? Which means that there are people out there who buy penny stocks based on advice from an email that landed in their bulk spam folder. Spammers buy stock in a small company, often with stock prices of only a few dollars or less per share. Then they send out millions of e-mail or text messages across the globe to encourage recipients to buy that stock.
Hot Stock Tip Scams
Investment bulletin boards and discussion groups are crammed with hot stock tips about impending developments and price soaring company mergers that are sure to send a stock soaring in value. Beware, just because these tips appear on some stock market forum doesn’t mean they are exempt from insider trading laws and rules. Investors should be aware that these stock tips can also come from almost any source, such as, internet chat rooms, internet bulletin boards, unsolicited calls, e-mail or word of mouth.
Online scams from stock spam reportedly cost investors hundreds of millions of dollars each year. Many scams are difficult to uncover, and victims are often reluctant to come forward, making data hard to come by. Before taking any action on a ‘hot stock tip’, you should verify the source and do your own research before investing. Investors are advised to use their judgment before acting on these recommendations. Investments in stock markets is risky.