Of all the stocks for dummies stories, this one has to be near or at the top.
Apparently rapper 50 Cent owns about 30 million shares of H&H Imports which is a penny stock. Right away warning signals should be going up for any knowledgable investor because penny stocks are very risky, especially ones that sell for between 5 and 10 cents.
Over the weekend the rapper started pumping the stock on Twitter to his 3.8 million followers. He was telling everyone they would double their money and that he owned the stock and they should too. In response to this, the stock at one point was up more than 240% all the way up to 39 cents. That equated to a gain very nice gain in the millions of dollars for 50 Cent.
The stock is down today more than 25% and he has now backed off his recommending it. Now he is telling everyone to do their homework before they buy but for those foolish folks who didn’t, it’s too late and many of them have gotten burned.
I’ve always said that penny stocks are for dummies but a story like this one is better than I ever thought I would find to illustrate it. It goes to show how gullible people are and how much influence celebrities have over their fans. It is really sad that so many people would buy a worthless stock just because a music rapper told them to. In reality, it is hard to feel sorry for those folks that have lost money on this bad penny stock.
You can read more about this story here on MSN.