I'm extremely pleased with the research you've done. We're not dealing with fly-by-night Internet stocks here. On all transactions, so far I'm averaging an 88% return. Keep up the good work.

Who Can You Trust

Before you start researching the penny stock market, it's important to know where to go for the most reliable information. There are very few trustworthy resources out there, but plenty of danger zones to watch out for. To help you make wise and informed choices, here's a few useful guidelines to follow.

Promotional Stocks: In Whose Best Interest?

Some services receive compensation from the companies whose stocks they promote. This is an obvious conflict of interest. It usually works like this: the promoters tout the stock in exchange for shares from the company. The more they can get investors excited, the higher they can drive up the prices, and the more they personally profit. So whose best interest do they have in mind? Yours? Not likely!

Penny stocks are constantly being promoted on numerous Websites as well as in hardcopy newsletters. Surprisingly, nearly 75% of these promoters are unscrupulous and out for their own gain. They'll do anything to make money, including exaggerating their track records or blatantly falsifying information to suit their own ends. Be especially wary if the "advice" is being offered for free, such as unsolicited email or fax spam.

In direct contrast to this practice, Penny Stock Insider answers to no one but our subscribing members, so we don't send out any unsolicited announcements. We maintain a strict arm's length relationship with the companies we profile and receive no compensation from them in any form. In fact, with the exception of the periodic interviews we conduct on behalf of our members, we don't even have contact with these companies.

Protect Yourself

It's important to read the fine print published by these services and to know what to look for when you do. Also, be sure there is somebody there you can turn to for answers to your questions. If you can't establish a two-way communication with the people offering the services, how can you possibly depend on their advice?

Even though top-notch penny stock services are hard to find, it's in your best interest to seek out the most professional one you can find.

The media recognizes Penny Stock Insider as an expert in the field and contacts us frequently for interviews or quotes. Coverage includes outlets such as the LA Times, CBS MarketWatch, the Associated Press, Yahoo! financial news, News.com.au, and various live radio programs.

We want to spread the word about the advantages penny stocks and the importance of relying on the research provided by reputable people.

I detail this concept, and just about everything to do with penny stocks, in my book, "To the Right of the Decimal: Understanding Penny Stocks." You get the book free with your subscription (a $39 value!).

In fact, my main reason for writing To the Right of the Decimal: Understanding Penny Stocks, was to help investors learn about the potential profits of trading in penny stocks, as well as the benefits of becoming a member of The Penny Stock Insider by Peter Leeds.

If you need help finding the most promising penny stock or if you just want to learn everything you can about these stocks, we invite you to check us out.

What About Those Water Cooler Tips?

We've all heard them. The hottest stock tip ever – and you're lucky enough to be getting in on the ground floor. The advice you get from somebody at work may be sincere and well intentioned, but everybody knows that old adage about anything that sounds too good to be true.

Chances are, by the time something becomes water cooler chatter, it's already spread like a virus, whether based on fact or rumor. There's a big fast profit in store for those that know how to start penny stock rumors. However, few, if any, of those profits will end up in your pocket.

It's just human nature to want to believe you're on the inside track, but you can bet that when you rush out to put in an order, there's going to be a long line of eager takers ahead of you.

Maybe the best way to protect yourself is to ask the tipster some of these questions:

What do you know about the company's revenues?
How much is their debt load?
How many shares are trading?
Who is the CEO?
What does the competition look like?

Then as you walk away leaving your friend scratching his head, here's a question you'll want to ask yourself:

Is this really the person I want to advise me?

We don't mean to imply that it's absolutely impossible to pick up a good tip this way. We just want to stress the importance of doing your own research before you plunk down your hard-earned cash.

If you do your own research and feel confident enough to act on the tip, the buck still stops with you. Maybe you'll profit, maybe you won't. If you win, thank your friend, but if your lose it all, don't blame them.

It's worth noting that the promotional stocks we warned you about could potentially earn you some money, but only if you know what you're doing. Even though you're going to hear about them from disreputable sources or Internet rumors gone wild, the fact is, the more people that buy into the scheme, the higher the prices go. Just remember that the price is no indication of any comparable underlying value. Those investors that do get in early and get out in time can make a profit. However, it's a slippery slope and you are taking a big risk of losing your money.

Beware of Specific Price Predictions

Don't be fooled when a colleague claims that a certain stock is going to hit a particular price after some event happens. For example, "XYZ is going to shoot up to $8.50 as soon as that merger is completed."

Your colleague's advice was probably not based on research, but rather picked up as a result of a promoter's rumor mill. The promoter gets the ball rolling and then sits back waiting for the price to spike before he sells.

It's best to ignore any financial advice unless it's based on well-reasoned information and the research and analysis of many accompanying factors.

Always rely on professional services, such as the high-level reports provided to the members at Penny Stock Insider. We have a proven track record for picking winning penny stocks and for providing our members with information about the optimal time and price for buying or selling.

However, you will never hear us make guarantees or suggest that a stock is going to hit a specific price. We will make recommendations based on our research, but it is illegal to make price guarantees. No one can predict exactly what a stock is going to do, even though some come closer than others. The bottom line is that definite price predictions are made either by those with intentions to deceive, or else by the ill informed.

When is a Professional Analyst a Professional?

There is no shortage of penny stock Websites boasting of their professional research and analysis expertise. But you might be shocked to learn that many of these Websites are actually programmed by teenagers!

It's the naïve and inexperienced investors that fall victims of these false claims. We wish there were ways to stop these fraudulent activities or to impose penalties, but unfortunately the situation does not seem to be high on the agendas of regulating bodies.

We hope you'll heed our warning and stay clear of these danger zones. However, should you decide to throw caution to the wind and give these services a try, make sure to follow our guidelines and ask all the right questions before you go get in too deep. Then come on back and join us. We promise never to say, "We told you so!"

Message Boards

Without a doubt, the most misleading information we've ever encountered can be found at online message boards. To the earnest individual looking for solid information, we say "stay clear!" You'll not only be wasting your valuable time reading the incorrect and misconstrued comments from those who have nothing useful to offer, you may inadvertently be swayed by some of the things you read.

Instead, we recommend relying on our high quality research techniques and making the most of your time.

Worth Repeating

Excuse us for being redundant, but we truly believe that our professional and advanced approach to evaluating penny stocks is way ahead of the pack. You can find out all about our services at PeterLeeds.com. We're so proud of our performance record, we've posted it there for all to see. You'll also find a few examples selected from the hundreds of testimonials we've received from our grateful members.

Even if you're not a member (and if not, why not!), when you visit our Website, you'll find plenty of free articles and great tips to get you started.