The absolute
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The absolute
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In recent years there have been other efforts by web publishers to fill the gap left by not having a pink sheet trading site. However, compared to the audited figures submitted to the SEC by a reporting company (and hence passed on to the public) the independently published information can be scanty at best and unreliable, biased or untrue at worst. Although financial web publishing is a good idea, right now it is strictly "buyer beware" when it comes to the results.
If someone hypes stock in a thinly-traded, non-reporting, pink sheet company it is difficult to determine truth from fiction and to study the company along with its peers. Even if you decide the company itself is sound, what happens if you want to sell the stock? Other investors may hesitate to buy stock in a company they cannot easily research, track and trade.
Are there micro companies out there which are well run, pursue sound fiscal policies and which have outstanding, innovative, competetive products? Of course there are. However, investing is still a gamble. The company may grow into the next Microsoft. Or it may be bought by Microsoft to the advantage of the shareholders. Or, even more likely is a scenario similar to the (very short) animated feature "Bambi Meets Godzilla". If the product is really good, it is likely that a large company will decide to enter the market and with their superior capital simply put the small company out of business.
And then there are unscrupulous traders who make money illegally at the expense of the public company and its legitimate shareholders by using naked shorting.
You can find information on small companies from: Stockbrokers, Newsletters & Research Sites, and Investor Relations Firms. IR firms are obviously paid by their clients to present information on the Internet. However, among broker reports, newsletter articles and research sites, it is not always easy to determine if the site owner has been paid by the subject companies. owns stock in the subject companies, or, on the other hand is totally objective. . Consider that a newsletter-writing guru from time to time owns stock in some of the hot companies he writes about (unless he is a total idiot!); therefore his perspective on those companies may become skewed. Reading the site's disclaimer is a good idea; however, lawyers tend to require that every client post a strong disclaimer. Therefore, this alone does not tell you how reliable the information might be.
How do you tell good information from doubtful information or an interesting gamble from downright fraud? Visit the following:
Remember to check out our Microcap Leaders.
