| I don't have to tell you that when it comes to stock | | | | in mind. The stocks tend to fluctuate wildly in prices |
| market investing it's a dog eat dog world! Make one | | | | and in no time at all your sell target may be reached, |
| small mistake and you can see years and years of | | | | sometimes quicker than you expected. If this happens, |
| careful savings and investing evaporate in the blink of | | | | pull the trigger and sell immediately even if you're |
| an eye. But the over-the-counter stock market, that's a | | | | tempted to ride the wave a little longer. What goes up |
| whole different beast completely! The OTC market is | | | | quickly can drop down just as quickly in the OTC |
| the wild wild west where just about anything goes. If | | | | market! |
| the regular stock market is dangerous, then the OTC | | | | Next, realize that up to 85% of all new issues will |
| market is life threateningly dangerous... | | | | usually be selling below their issue price within the first |
| Why is that? Because the OTC market deals with | | | | year and a half because most of these new stocks |
| small stocks that are very thinly traded. Even without | | | | are overpriced when they are first issued and after |
| shenanigans, a stock may just drop out of the sky | | | | the first year or so the buzz has worn off and the |
| because the company is simply not very good. But | | | | stock drops. |
| under the worst of circumstances there are all kinds | | | | Next, pay special attention to the auditors of a new |
| of crazy things that can go on including manipulation | | | | issue. You can find out who the auditors are by |
| and insider trading because this market isn't as tightly | | | | reading the prospectus carefully. If you've never heard |
| regulated as the major stock markets are. | | | | of the auditor, that's a red flag and you should maybe |
| Still, there are some things that you can do to help | | | | consider running away. Auditors are all about |
| insulate yourself from most of the danger and that's | | | | reputation. Without a reputation and auditor's numbers |
| what I'm going to talk about in this article today. | | | | are just that... numbers, they may not mean anything! |
| The first rule is to only invest when you have a clear | | | | Finally, do some research on the underwriters. If the |
| idea of why you want to invest. Many times we buy | | | | brokerage firm that is underwriting the OTC issue has |
| OTC stock simply because it's so cheap and we | | | | been in trouble in the past with the SEC, this may be a |
| stand to make a killing if it increases even a little. That | | | | clear indicator that your OTC stock is not as solid as it |
| is no reason to buy a stock. You should only buy stock | | | | may look. Good companies use good auditors and |
| for sound fundamental reasons, i.e. the company is a | | | | good brokers for their underwriting. Less solid |
| good company that has good prospects for future | | | | companies take what they can get. |
| growth. Without that future growth, there's no reason | | | | Investing in OTC companies can be a lot of fun, just as |
| to invest ever. | | | | I'm sure living in the Wild Wild West way back when |
| The next rule is to realize that over-the-counter stocks | | | | was also a lot of fun. If you think you've got the |
| are almost always short-term plays. This means that | | | | temperament then I wish you all the luck in the world, |
| you should never buy one without a clear selling target | | | | not that you'll need it! |