Ebola Stocks: Avoid them like the Plague!

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So says the U.S. Securities and Exchange Commission (SEC) which recently suspended trading for ten business days in the stocks of four companies that claim to be developing products or services in response to the Ebola outbreak. Also, the SEC issued an Investor Alert warning investors about scams involving Ebola-related companies. The four companies affected are

  • Bravo Enterprises Ltd.(Ticker: OGNG) of Patchogue, NY
  • Immunotech Laboratories Inc. (Ticker: IMMB) of Monrovia, CA
  • Myriad Interactive Media Inc.(Ticker: MYRY) of Toronto, Canada
  • WholeHEALTH Products Inc. (Ticker: GWPC) of Anaheim, CA

The stocks of all of these companies are very thinly-traded pink sheet/penny stocks and thus subject to price manipulation (pump-and-dump) schemes by unscrupulous boiler-room operators who promise huge returns to their trusting marks. If you need a refresher on how this works, please check out this memorable scene from the movie Boiler Room.

The SEC alert notes that we have seen this movie many times before with current event items like marijuana-related stocks. The common denominators of all these schemes are the following:

  • Promises or guarantees of high investment returns with little or no risk.
  • Pressure to buy RIGHT NOW!
  • Unsolicited offers, including through social media.
  • Unregistered investment professionals

The SEC's parting word of advice for all investors is to do their homework. Make use of the SEC's Investment Adviser Public Disclosure (IAPD) and the Financial Industry Regulatory Authority (FINRA)'s BrokerCheck Websites to research individuals and firms who sell investments or make investment recommendations.  Needless to say, if a touted company's stock is not listed in a commonly used database such as Yahoo Finance or it shows up with a price measured in pennies or fractions of pennies, then stay far, far away! Of course, as far as we at Index Fund Advisors are concerned, the only winning move in the stock-picking game is not to play.