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Wednesday, July 03, 2013 8:04:45 AM
First, companies on the OTC and Pink Sheets are usually start-ups or conceptual businesses. They need capital to operate or put their business plans in motion, so sellings shares is a regular part of that funding. Why does any company sell stock in the first place? To raise money-- even if you're Facebook trading on the big boards, the initial public offering is to sell shares of stock to raise capital.
With that said, there are also companies that are frauds,or at least deceptive in that they don't really have any business plans or intentions-- they exist only to sell shares of stock over and over again until the game is over, but to do that successfully, they must promote their ticker as if it is legit, though they must be careful because releasing a PR with lies is illegal.
I'm not saying what CWNM is...but it cannot be assumed that simply because they are "diluting" that they are involved in some horrible, illegal practice, because that is why they trade publicly-- to sell shares of stock.
Here is the other point I'd like to make...shareholders are not having their money "stolen" though it may feel like it. Why? Because anybody who owns shares WILLINGLY invested their money. It may not have been a wise investment, or the shares may not have been purchased at a time that was favorable to the buyer, but they purchased shares of their own free will. Nobody from the company walked into your house, or your bank, and grabbed your wallet. There are HUGE risks in buying stock from startup companies trading on the OTC, and anybody buying shares here is taking that risk...willingly. Thus, no theft is involved. If the company is being fraudulent in their claims, then yes, there is illegal deception going on there, and it could be said that money was taken under false pretenses.
So, if you chose to trade a stock, be aware of what is going on-- if the stock is being promoted, then you can know with near certainty that they plan to sell more shares (or at least a third party intends to do so). If that scares you, then don't buy it. Wait until the shares are dumped (sold) and trade for a short-term bounce...or choose to invest in big board stocks and mutual funds, where the risk is much less.
I am not a promoter or professional stock trader. I'm a regular guy who enjoys stock trading to make (or lose) a few dollars. I am only responsible for my own trading foibles, not yours...do your own DD.
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