Financial Security

Investing in pink sheets should only be done with extreme caution and with throw away money. However, having said that, they are not the only companies you need to be aware of.

Listen - I have watched many of my pinksheets reverse split and ruin any chance I had of making money, but reverse splits don’t just happen in pinksheets.

I felt solid about the company Matech Corp (Material Technologies) - MTTG.OB now. Here is a company that can test and find miniscule stress cracks in our bridges. They are the only company, supposedly, that can do this. So I invested in it and bought 300 shares. Well - apparently this company, as well as many others, have small disregard for small shareholders.

Their stock price dropped, but I still felt at some point it would pick back up, especially when I read many of their news releases. The problem was they decided they needed to do a reverse split - 1000 to 1 - which meant myself and others in my situation were simply dropped out of the equation. No stock left! NADA!

The sad part is these companies claim to do this to help their stock prices rise and, in effect, their stockholders. But not the little guy. I emailed this company with my concerns when I found out this was in the works and did not get any sort of reply back whatsoever. Apparently people like myself, who invested solid money with them, mean absolutely nothing. If you don’t have a large amount of stock, you are toast.

I have information elsewhere on this site showing what a reverse split is but basically, in this case, if you own 1000 shares of stock with them, you now have 1 share. Shareholders such as myself have none. They were very happy to accept your money to help them build the company, and not too concerned when they had to eliminate the small fry.

Use caution when investing in any company, whether it be small or large, but particularly these small cap companies. The bottom line is they want to make profit and it does not matter who loses along the way.

Sure. Occasionally you will find a penny stock that soars and can make someone a lot of money. This is what draws many beginning investors to penny stocks and/or pink sheets.

The problem is, way more often than not you are going to lose money. If you decide to test the waters of such stocks, do so only with money you do not mind losing. It’s kind of like going to Las Vegas. You go for the trips with visions of getting rich but many people are smart enough to know this probably won’t happen. They put aside some money they have every intention of losing and hope they will hit the big one. This is called fun money.

If you play a penny stock hoping it will go big time, first thoroughly investigate the stock. Then put in only what you can afford to lose.

Read this article Beware Investing in Pink Sheets just to get an understanding of what horrors can and do happen.