Entry

Is "The Stockster" a real company?

Mar 23rd, 2006 02:17
David Cowgill, http://www.stockster.net/crm/the-stockster/

I believe they are. But you need to be careful....investors, 
especially small cap traders, are often lured into buying a company's 
stock in order to live up to the dream of making a quick buck, easily 
and without pain. To do this, one would have to bypass the higher 
exchanges such as the New York Stock Exchange, Nasdaq and American 
Stock Exchange in order to scout for companies to purchase on lower 
market trading venues like the Over the Counter Bulletin Board and the 
Pink Sheets where higher percentage returns on investment is the norm. 
These are public markets where regulatory requirements are practically 
invisible and disclosure through Securities and Exchange Commission 
filings is limited. Yet, an investor is still able to keep his mouth 
watering because of the potential of doubling or even tripling his 
investment in a matter of hours. Even though those risks would scare 
off any rational or conservative investor, the high reward is able to 
outweigh that risk, giving a strange comfort to the investor who is 
able to ignore those risks in exchange for a chance of a profit. 
To reach a few of these investors, it does not take much for any 
company or management team to entice them to buy their stock. However, 
it does take a cunning, masterful and sometimes scheming promoter to 
capture many of these investors who are gullible to greed and desire 
to reap profits. 
It all begins with a plan by the chief executive officer of the 
company, sometimes the only real or sole employee of the company, who 
goes out and hires consultants to help with his vision. The vision, at 
the surface, is an ambitious plan to create some sort of long term 
value through a legitimate operation. However, what meets the eye is 
not always true, and time and time again, a company's quest to create 
value is just an excuse to raise money through a scheme that is 
devised to stash as much money as possible, not for company 
operations, but for the management's piggy banks. 
The promotion is underway when the consultants get to work with direct 
supervision of management, and this is where it gets interesting. 
Usually, the promotion starts off with a flurry of press releases 
filled with forward looking statements that have yet to be proven or 
backed with real results. Then if it is a real top notch promotion, a 
coordinated visibility campaign would occur with a well known 
investment newsletter that would successfully convert readers into 
buyers of the company's stock. 
Take for instance, the June edition of the Kissinger Financial Letter, 
which is helping to create a bit of publicity for some undiscovered 
company. In this particular edition, the newsletter uses a seemingly 
very reputable source, an oil giant who has made billions in the 
Giddings Oil Fields of South Texas to help promote Am-Tex Oil & Gas 
(Pink Sheets: AMTX), a tiny oil and gas exploration company in which 
25% of the project is jointly owned by the oil mogul's company. With 
his untarnished credibility, the newsletter leaves him as the backdrop 
for which they could now paint a picture of a sure thing investment. 
The newsletter provides even more incentives by claiming that if oil 
is produced at certain levels, the stock price of Am-Tex could 
appreciate thousands of percentage points. 
While this may seem like a sure bet to snatch a pot of gold, this mind 
frame is what makes the average investor susceptible to risking their 
money in these types of investments. If you closely read the fine 
print, the editors of the publicly distributed report provided by 
Kissinger Financial Letter have received an editorial fee, as well as 
distribution costs of the newsletter by a third party. What is even 
more eye opening is that the newsletter was paid an astounding 100,000 
shares of Am-Tex Oil & Gas by a third party. 
When thinking logically, in a promotion with typical publicity stunts 
through major newsletters or otherwise, one should be able to see the 
red flags in a case like this. If the corporation has that much 
potential to produce a highly lucrative supply of oil, with the 
support of an oil giant, why would there need to be any reason to 
promote it? A good investor needs to ignore the hype and take off his 
rose colored glasses. Every investor must realize that money comes 
with responsibility, and if it is too good to be true, than it most 
likely is. 
http://www.stockster.net/crm/the-stockster/