New System for Pink Sheet Stocks
There has been a significant amount of publicity recently given to the new system created by Pink Sheets for their stocks. The system supposed to provide some transaparency but does it? Here ’s our take and we would love to know yours.
Even though the warning system is a valid and honorable attempt to create transparency in the marketplace, the simple fact is that very few pink sheet stocks are bought by investors with a systematic approach to investing. There is very little due diligence and reading message boards is not due diligence. In addition, examining the financial statements of companies that have little revenues and are in most cases out of cash does not provide an advantage to the investor. The fact is that investing in pink sheet stocks in which I am sometimes guilty is the ultimate speculation. Why, because the odds of winning in these stocks is not good. Why, because if they had a Management team and a product which was so good (2 requirements to build a successful company), the company probably would have had either the knowledge or attention of the financial marketplace to raise enough capital to avoid the Pink Sheets.
Here’s how I look at investing in Pink Sheet Stocks. Any investment, no matter how good it looks, is a 35-1 shot at best. However, 35-1 odds on a $10,000 investment can make you some real money.
To this investor, transparency and disclosure by the Pink Sheets is like reading the racing sheets at Aqueduct Race Track. I’m not sure how much good it does when you’re playing the long shots. .
I look at some of the sites on the Internet that are now following stock promotion, stock spam etc. That gives me much more of an advantage than reading the financial statements.
We would love to know what your thinking. Please tell us.
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