Archie's Corner

[bigbadben]

Beware of “Strong Buy Recommendations” for OTCBB Stocks


SANTA MARIA, CA (OTCBB NEWSWIRE), September 7, 2001-- Stock research firms, investor relations firms, investment bankers, “analysts,” etc. often put out email blasts and/or “news” into the investment community about certain stocks. Investors need to be very leery about this kind of information. The fact is there is no official following by analysts for OTCBB stocks on Wall Street. Wall Street analysts typically stay away from low priced, speculative issues like a vast majority of those found on the OTCBB and The Pink Sheets. That is why you almost never read about these stocks in places like the Wall Street Journal, Investors Business Daily, CNBC, Bloomberg, and others. The real experts know that these tiny companies typically have little or no fundamental value and that the stocks do not behave like their counterparts on the larger exchanges. This makes professional analyst coverage extremely difficult if not impossible.



In desperation of poor market conditions these days many firms will release news or psuedo news in the form of a “Strong Buy Recommendation.” We have received dozens of these over the past several months. It gets a little old quite frankly. We received one this morning for a .70 stock. Here is some of the language that is used:



“Today's market has left investors chewing on their fingernails in fear. But you could be one of the lucky ones...the champion investor who everybody envies: we'll let you in on a little secret, which will make you a very substantial profit…In our opinion, this represents a tremendous investment opportunity since there is a very high demand…This company is extremely undervalued and based on EPS projections a price target of $6.00 can be reached in the near future…This company is extremely undervalued and based on EPS projections a price target of $6.00 can be reached in the near future.”



Particularly noteworthy of the one we received today is the fact that the disclaimer (the legal disclosure requirements that the SEC requires by firms promoting stocks) leaves out critical information that investors should know. Like how much was the firm paid? If it wasn’t paid then how much stock does the firm own and at what price did it purchase those shares? For such strong language as “Strong Buy Recommendation” don’t investors need to know this information?



Protect yourself. Ask the tough questions. Call the promoter and call the company and get the questions answered. It could mean all the difference in the world between winning and losing on the OTCBB.






Ben