Listen To Earnings Calls, Not Unsolicited Sales Calls

In May of this year, John Kelly, a "Metro" columnist for The Washington Post, wrote about getting an unsolicited phone call from Undercoverstocks.com in a piece entitled, "Mysterious call had me intrigued. What does it mean to 'watch' a stock?"

Last week, the FBI announced an investment fraud sting, "Operation Pennypincher," and earnings season started. Today the RedChip Global Online CEO Conference starts.

All of these events are related.

Two of the most important parts of investing are due diligence and risk management. Anyone answering an unsolicited phone call needs to practice a great deal of due diligence before buying. Obviously, the internet makes that much easier. What takes diligence to the next level is participating in earnings calls, especially those related to events like the RedChip Global Online CEO Conference.

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There are many outstanding small cap companies, many which would be considered "penny stocks" or "pink sheets."

Some of the greatest investors in history like Warren Buffett and Dr. Phillip Frost have done very well in the small cap sector. As detailed in a previous article on Benzinga, Buffett's favorite investment is not Coca-Cola KO or ExxonMobil XOM, two of his largest holdings, but See's Candies, as he has learned so much about operating a business from it. Dr. Frost, a billionaire investor, is the largest shareholder of Opko Health OPK, which is associated with RedChip. So is Quadrant 4 Systems QFOR, a high-tech small cap whose revenues exceed its market cap.

During the RedChip Global Online CEO Conference, individual investors can submit questions to company CEOs who will answer them on the spot. The same can happen with earnings calls for small caps.

Don't buy a stock recommended by someone over the phone. That makes for splashy movies like "Boiler Room" and "The Wolf of Wall Street," not for a solid portfolio. Earnings season is upon us: participate and invest responsibility for the long term after performing due diligence and practicing risk management.