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Strategies & Market Trends : Paid Mailer Stocks -- Ignore unavailable to you. Want to Upgrade?


To: peter michaelson who wrote (973)1/24/2011 2:05:23 PM
From: Smilodon  Respond to of 1589
 



To: peter michaelson who wrote (973)1/27/2011 7:09:31 PM
From: StockDung  Respond to of 1589
 
Don't Buy First China Pharmaceuticals Group (OTCB: FCPG) - Mike Swanson (01/27/11)
Stock Market Commentary

wallstreetwindow.com

Yesterday in my mail box I got one of the most disappointing pieces of mail in my life. It was a flyer promoting the penny stock First China Pharmaceuticals Group (OTCB:: FCPG) with the face of Tobin Smith on it.

I've watched Tobin Smith for years on FOX News where he has been a regular guest on their weekend Bulls and Bears show. On the show he has presented various investments ideas over the years, many of which made money for his viewers.

He founded Changewave.com for the Phillips publishing group, but left them a few years ago to start his own company called NBT Research.

He is someone who I always enjoyed seeing on TV, so this flyer was a huge disappointment to me, because it now shows him working in the worst part of the financial markets - the cesspool of paid penny stock promotion.

In my view there is nothing worse than being paid to promote garbage penny stocks.

On the back of the flyer in the disclaimer section it says that neither Smith nor his NBT company own a single share of the stock, however they expect "to receive new registrants to its investor relations services as a result of this advertising effort."

On his twitter account Smith calls this stock his number one pick.

This is an old game where a newsletter writer gets paid to put his face on the front page of a penny stock flyer touting a pump and dump stock. If they aren't paid in stock they end up making money off of the new subscriptions.

On the flyer it also states that "Mediacom Strategies, Inc., paid one-hundred fifty-eight thousand dollars, which it received from a shareholder(s) of the feature company, who may or will sell shares of the feature company at or about the time of this mailing..."

Now the company is a China drug company that made one million in revenue last year and made $114k in net income. The stock has a market cap of $120 million dollars!

My financial website doesn't make a million in revenue, but it has made over $114k in a year. And I've had years in the stock market where I've made much more than that.

I don't think that makes my website worth over $120 million dollars!

That is how insanely overvalued this stock is. It has a P/E of 666. The devil's number.

This is one of the biggest P/E's I've ever seen in my life.

And right on the cover of the flyer next to Tobin's face is a promise that if you buy the stock it "could grab a fast $1,135%" gain for you.

If that were to happen then this stock would grow in size to be worth more than any other company on the planet - bigger in fact than the size of the entire US national debt. It would become the first trillion dollar stock!

It's an absurd claim, but that is what happens when you get paid by penny stock companies. You sell yourself out and end up making ridiculous statements and making a fool out of yourself.

I write this in the hope that Smith will turn away from such promotions in the future. He can do better than this and I hope he will. Everyone makes mistakes. I've done a few things in the past I regret as I'm sure you have too, so do not be too hard on Smith. Hopefully this post will help wake him up.

Reality is the economy has been bad the past few years and many financial newsletters got hit on hard times in 2008. Lots of them went out of business and many people got financially desperate. Maybe that is the case here.

What is shocking is that someone on Fox News is being paid to promote penny stocks and they don't care. He is a regular TV guest on FOX, so is the biggest most mainstream person I've ever seen fall into stock promotion. As much as I complain about CNBC they would never allow a regular guest to do this.

The only way to stop such things is to point them out. Experts on TV get a huge audience and should treat that as a high responsibility.

I know I've been offered money to promote stocks and every time I have turned down such deals. You do not need to do such things to build a good financial advisory business. You can spend money on advertising yourself like I do and not depend on unsavory people.

It is true that many investors are attracted to penny stocks and there is the potential for quick returns in the penny stock world. But almost every single penny stock writer is just a paid promoter.

The only one I know who isn't and is able to do good for people is Matt Morris of Microcapmillionaires who lives just down the road from me in North Carolina. If you want to get into penny stocks and get ideas from someone who is not paid by anyone and is objective then check out his free newsletter at Microcapmillionaires.com.

He's got a video showing you how to find penny stocks before they go up. Watch it by going here.