In my opinion, there are many stocks which are scams and nicely promoted by different alert agencies.
Here is how i try to find if the stock is a scam or not. The best thing is to avoid such stocks but sometime its good buy for few hour to make some quick profit when they are rallying but don't hold it for long. You should know where your investing your hard earn money.
Step 1: Check the stock info on http://www.pinksheets.com/
Step 2: Check for quick signs. Avoid Caveat emptor ones. http://www.pinksheets.com/pink/otcguide/investors_market_tiers.jsp
Step 3: In the company info, read company notes, to find out if the company keep changing their business. (Avoid if they keep changing too much from one sector to another like they may be travel agency at one time and now a biotech company)
Step 4: Such companies tries to promote with some website first and then they publish their news.
Step 5: "Letter of intent" (LOI), is the most common term used by such companies.
Step 6. Most of them try to establish business in China, Zimbabwe or Africa, where no one will ever go to check if it really exist.
Step 7. Any company making assumption of making million or billion in 1 quarter or a year is only making fool of themselves unless they are big companies.
Step 8: If a company market cap is in thousands and they publish the news of getting million dollar contract avoid them.
Step 9: This companies keep changing business and ticker name from time to time and finally they vanish.
Step 10: Such companies talk about business which is not even on the paper. Everything is in air. Read every detail about the companies before investing.
You can read further tips on buying and selling stocks smartly @ http://docs.google.com/View?id=ddbw4xzz_5c8tps6gw
Final note: Avoid such scam companies, if not don't hold it for long because there are chances of losing everything. Good luck.
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