Penny Stock Prophet Review

Penny Stock Prophet Product Details

My Honest Penny Stock Prophet Review

Penny Stock Prophet is a daily alert newsletter run by penny stock trader, James Connelly. James was a so-called college student who stumbled upon a profitable trading strategy that he uses to make millions. The truth is that James Connelly is a pump and dump stock promoter who profits via two ways:

  • He receives large cash payouts to promote certain companies from third party investors
  • He acquires a position in the same company and dumps his shares onto his unsuspecting subscribers

What Exactly is a Pump and Dump Scheme?

“Pump and dump” schemes, also known as “hype and dump manipulation,” involve the touting of a company’s stock (typically microcap companies) through false and misleading statements to the marketplace. After pumping the stock, fraudsters make huge profits by selling their cheap stock into the market.

Pump and dump schemes often occur on the Internet where it is common to see messages posted that urge readers to buy a stock quickly or to sell before the price goes down, or a telemarketer will call using the same sort of pitch. Often the promoters will claim to have “inside” information about an impending development or to use an “infallible” combination of economic and stock market data to pick stocks. In reality, they may be company insiders or paid promoters who stand to gain by selling their shares after the stock price is “pumped” up by the buying frenzy they create. Once these fraudsters “dump” their shares and stop hyping the stock, the price typically falls, and investors lose their money. (Source: SEC.gov)

Basically, stock promoters add “hype” to a stock, which encourages buying. The company lacks any real earnings or substance, so it’s the countdown until the stock tanks!

How Does the Penny Stock Prophet Scam Work?

It’s simple. Most of the scam is actually revealed in each and every e-mail that James Connelly sends out. I joined James’ newsletter a few months back to see if it was worth promoting or not. If you pay close attention, you can see the scam at work.

In the screenshot above, it clearly states that Penny Stock Prophet was compensated twice on two separate occasions:

  • $40k in cash for promoting Solar Park Inititives Inc (SOPV.OB)
  • $50k in cash for previously covering Solar Park Inititives Inc (SOPV.OB)

Stock promoters like James Connelly often have very large e-mail lists, and may even send faxes, letters or make phone calls to attract attention towards a stock.

Penny Stock Prophet Real Results Example:  SOPV.OB

  • 12/1/10: He recommended SOPV.OV at $0.36
  • 12/2/10: SOPV.OB spikes to $0.48 in just 1 day!
  • 12/10/10: SOPV.OB is at just $0.31 and is going lower!
Typically course of Pump and Dump stocks

The Real Way to Profit from Penny Stock Prophet

If you buy into the hype, then you are a sucker. However, you can make some VERY easy gains by shorting the stock. If you’re not familiar with buying short, then check out this explanation:

A short sale is generally the sale of a stock you do not own. Investors who sell short believe the price of the stock will fall. If the price drops, you can buy the stock at the lower price and make a profit. If the price of the stock rises and you buy it back later at the higher price, you will incur a loss.

When you sell short, your brokerage firm loans you the stock. The stock you borrow comes from either the firm’s own inventory, the margin account of another of the firm’s clients, or another brokerage firm. As with buying stock on margin, you are subject to the margin rules. Other fees and charges may apply. If the stock you borrow pays a dividend, you must pay the dividend to the person or firm making the loan. (Source: Sec.Gov)

Any of James Connelly’s picks take the same course: initial hype, fast runup, then plunge when he dumps his shares.

Learn How to Short Stocks from the PennyStocking Guru, Timothy Sykes

Sykes on the cover of Young Money Magazine

I knew that shorting stocks was a very profitable and predictable strategy, but I didn’t know where to start. Timothy Sykes is a trader who turned $14k of his bar mitzfah money into over $1 million dollars shorting pump and dumps in just 18 months during the Dot com crash.

He is the go to source  when it comes to short selling penny stocks. I am a proud Tim Alerts subscribers, and highly recommend his Pennystocking Silver Membership if you’re looking to make some real money.

Why is Short Selling Penny Stock Smarter?

What goes up must come down. It’s much easier to figure out when Penny Stock Prophet’s picks will collapse than when they will rise. His subscribers buy millions of shares when he sends out his mailers. Rather than scramble with the herd, I rather sit back and wait for these crappy stocks to plummet.

Penny Stock Prophet Pros

  • Receive stock alerts via e-mail to act on
  • Full disclosure of compensation in each and every newsletter
  • Only 1 pick or so per week
  • Great for finding easy shorts

Penny Stock Prophet Cons

  • Pump and dumps stocks that 3rd party investors pay him to promote
  • Misleads investors into thinking that his picks are good buys
  • Will bankrupt the average amateur in no time

Penny Stock Prophet Final Verdict

I cannot recommended Penny Stock Prophet to the average investor. Since most people will never learn how to properly short stocks, I advise you stay away. There are much better newsletters and websites out there if you want to make money buying stocks. Also, consider using a good penny stock screener to find undervalued penny stocks to buy.

Read More: Prosper.com Review

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