Smart Investing In Penny Stocks

| August 27, 2015

Pump and DumpSmart investing in penny stocks means different things to different traders.

But there’s one smart move every trader should make when it comes to buying penny stocks.

Stay away from the pump and dump scam artists.  Make sure you’re protected.

You can do this when you know the best penny stocks scam right now.

In a minute, I’ll introduce you to three pump and dump scam artists.  Three scoundrels who wound up in hot water with the Securities and Exchange Commission earlier this summer.

But first, for investors with a thirst for getting even instead of getting mad…

Here’s a way to actually turn the tide in your favor when it comes to pump and dump penny stocks.

It might strike you as a little bit weird, and it’s not for everyone, but it works…

Smart Investing In Penny Stocks Tip #1

When you know who the scam artists are, you can pocket some fairly quick profits.


Buy early and sell into the first spike.  Get in and out in a hurry.

Don’t be greedy.  Don’t get excited by the first spike and figure it will keep soaring.  Don’t wait around for a second spike.

Keep it simple, take some modest profits, get in and get out.

The trick, of course, is to be sure that you’re in early.  I know of a trader who despises the pump and dump guys as much as we do here at Penny Stock Research.


But he’s on a bunch of email lists to make sure he’s in early, and out quickly.

He makes sure the pump and dump guys find him, so he can find a good trade.

Something pretty important to keep in mind if you use this penny stock trading tactic… make sure you’ve got decent volume.

If the volume’s not there, move on.  Smart investing in penny stocks means knowing when to sit still.

But maybe this kind of trading’s not for you.

If you don’t want to have anything to do with the putrid promoters who are pumping and dumping, here’s another tactic.

Smart Investing In Penny Stocks Tip #2

Insist on strong liquidity.

In other words, if there’s not enough money invested in the stock, stay away.


Well, there are a couple of reasons.

First, liquidity is like a lock.  When there’s not enough of it, you might find yourself trapped after buying the stock.

The low liquidity means there could be a huge gap between bid and ask prices.  This gap could easily cause you expensive trouble and force you to hold your stock longer than you want.

Most of the time, the more liquidity, the more supply and demand there is for the stock.

This can help you avoid being locked in when you’re anxious to sell, and there’s little interest in the stock, no strong bids.

Another thing about liquidity to keep in mind… the lower the liquidity, the easier the stock is to manipulate.  And that’s definitely not a penny stock you want to be trading.

Let me give you an example.

And let me introduce you to three of the sleaziest pump and dump characters to spread their financial filth in recent years.

Joshua Samuel Aaron (aka Mike Shields), Gery Shalon (aka Phillipe Mousset and Christopher Engeham), and Zvi Orenstein (aka Aviv Stein and John Avery).

These three swindlers have been charged by The Securities and Exchange Commission with defrauding investors with penny stock pump and dump promotions.

Sadly, they may be beyond the long arm of the law.  They live in Israel.  We’ll see what happens with the extradition.  Anyhow…

Want to see some of their handiwork?  Check out this chart…

$BRND stock chart a pump and dump #PennyStocks classic scam

Yes… that flat lining equals zero.  That’s what it looks like when a pump and dump pro takes the money and runs.

Joshua, Geri, and Zvi sure had a great time in 2012 promoting a company called Premier Brands $BRND.

And you can see what happened in October 2012.  They sold their stock and banked illicit profits.

Premier Brands was just one of the pump and dump penny stocks these rascals rode to more than $2.8 million in dirty money.

It’s a medical marijuana company that’s apparently still in business.

Premier Brands is a poster child for the kind of penny stock scams out there looking to swindle investors who want in on the ground floor and cash in big on changing marijuana laws.

The other companies Joshua, Geri, and Zvi played their pump and dump games with…

Southern Home Medical Equipment $SHOM, Greenfield Farms Grassfed Beef, Inc. $GRAS, Next Generation Energy Corporation $NGMC, Mustang Alliances, Inc. $MSTG, and IDO Security, Inc $IDOI.

This kind of scam is easy for guys like Joshua, Geri, and Zvi to pull off when there’s not strong liquidity.

How Much Of A Market Cap Is Enough When You’re Investing In Penny Stocks?

It’s tough to play games with a penny stock with a market cap of more than $50 million.

Not impossible, but tough.

So when you’re investing in penny stocks, look for some financial meat on the bone.

And never discount the possibility that one of the notorious penny stock promoters could be behind the hot penny stocks you hear about.

So that’s it.  If you have a question about a stock or investment idea, shoot us an email or leave us a comment on the website.

Good investing…

Brian Kent

Note:  If you’re interested in learning more about Brian Kent’s Penny Stock All-Stars premium service… and learning about the stocks we’re trading for profit… you can get the inside scoop on penny stocks here.

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Category: Pump & Dump Alerts

About the Author ()

Brian Kent is the Editor for He also pens Penny Stock All-Stars, an investment advisory focused on discovering small-cap and micro-cap stocks that are destined to become the market's next Blue Chips.