They're back. The scams and schemes that plagued the dotcom boom have popped up wearing a shiny new mask - a green mask.

A recent announcement from the Financial Industry Regulatory Authority (FINRA) has alerted investors to the newest target in the scamming world - alternative energy and other "green investing" initiatives. (To read FINRA's full warning, see "Save Your Energy and Money - Don't Fall for Energy Stock Scams".)

The arrival of a new crop of scams is right on cue, just as investor interest is peaking in a new set of technologies and a very hot sector. Those of us who have followed the market for many years can remember - but not fondly - the endless internet-related pump & dump scams of the late 1990s, where a few wisely chosen buzzwords could ignite just enough interest to make a few people part with their money before the truth came to light.

Green is Just a Word
Even though today's markets have more regulation than at any other period in the past, scammers can still write up false presentation materials and slap them onto OTC stocks, lifeless limited partnership interests, or even private shell companies. With so much of today's business (and information) being transacted on the internet, the physical distance between overeager investors and those who wish to prey on them is literally wider than ever. Making matters worse is the fact that anyone with a few bucks and a few hours to spare can send a million spam emails, text messages or phone calls. (To learn more about these scams, see Wham Bam Micro-Cap Scam and Online Investment Scam Tutorial.)

Because nobody wants to get duped, here are a few tips and tricks to keep in mind for those looking into green investing opportunities:

An Email is Only a Starting Point
Although I would caution against using unsolicited emails at all in your research tasks, at least keep them to just starting points for ideas - don't let them be definitive statements. Any legitimate investment being touted in an email should give you links to sources of real information such as SEC statements, business wire releases (from sources such as Reuters and Associated Press), and company websites.

Don't fall for bombastic statements such as, "This winner will triple your investment in just six months!" As with any other investment, take your time and perform your own due diligence. No investment that is solid will run away from you in a week or two's time. (To get started on your on investigation, see Small Cap Research Can Have Big Impact.)

Pay Attention to the Narrator
Anybody who is pitching you an investment should be able to list their credentials. Most likely the person should be a registered investment professional with the SEC or FINRA. Any registered securities broker can have his or her background verified. If you're in any way cautious about an investment opportunity, you should start by checking credentials.

Beware of any language that paints too rosy a picture. We all want to earn outsized returns, but any publicly-traded company that is in it for the long haul will temper its statements and projections, and this is usually in the best interest of shareholders. Stocks that carry outsized growth projections tend to be volatile, and that could drive away valuable long-term and institutional investors.

A Word of Caution on Green Investing
Going green is both an investing idea and a personal philosophy. For people like myself, now is an exciting time because both ideals can blend into one investment philosophy. However, there will be companies that lose out, and they will be found in all sectors, even the exciting ones. That is the beauty of inspiring competition in areas we want to see improvement in, areas like environmental sustainability and alternative energy. So, keep in mind that anyone offering guarantees is violating one of the two oldest rules in investing:

1) If it sounds too good to be true, it probably is.
2) If someone found a sure-fire way to make money in the markets, they would never tell anyone about it.

No Shortage of the Real Thing
Now that green investing is hitting its mainstream stride, investors have an increasing menu of choices. There are hundreds of small-cap stocks directly engaged in exciting businesses like alternative energy, clean air technology and biofuels. There are also hundreds, if not thousands of mid-cap and large-cap companies devoting plenty of capital and manpower toward similar efforts. A couple of the large players include Archer Daniels Midland (NYSE:ADM) and solar company SunPower (Nasdaq:SPWR).

In short, there's no need to scour the pink sheets for solid green investments. There are plenty of high-growth opportunities to be found in fully-regulated equities that trade on national exchanges.

Parting Thoughts
The safest way to "go green" with your investing is to stick with regulated, publicly traded companies that have real products, services and intellectual property in the areas most interesting to you. There are more than enough of those available, so narrow your search to the devil we know. Even the biggest stocks and funds offer no guarantees, but at least they have regulators watching our backs.

Looking to cook up a market-stomping stock portfolio? Check out our FREE report "7 Ingredients to Market Beating Stocks" and get started right now!

Related Articles
  1. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  2. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  3. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  4. Economics

    Is Wall Street Living in Denial?

    Will remaining calm and staying long present significant risks to your investment health?
  5. Stock Analysis

    When Will Dick's Sporting Goods Bounce Back? (DKS)

    Is DKS a bargain here?
  6. Investing News

    How AT&T Evolved into a Mobile Phone Giant

    A third of Americans use an AT&T mobile phone. How did it evolve from a state-sponsored monopoly, though antitrust and a technological revolution?
  7. Stock Analysis

    Home Depot: Can its Shares Continue Climbing?

    Home Depot has outperformed the market by a wide margin in the last 12 months. Is this sustainable?
  8. Stock Analysis

    Yelp: Can it Regain its Losses in 2016? (YELP)

    Yelp investors have had reason to be happy recently. Will the good spirits last?
  9. Stock Analysis

    Is Walmart's Rally Sustainable? (WMT)

    Walmart is enjoying a short-term rally. Is it sustainable? Is Amazon still a better bet?
  10. Stock Analysis

    GoPro's Stock: Can it Fall Much Further? (GPRO)

    As a company that primarily sells discretionary products, GoPro and its potential falls right in line with consumer trends. Is that good or bad?
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  3. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  4. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  5. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
  6. Monetary Policy

    Monetary policy is the actions of a central bank, currency board or other regulatory committee that determine the size and ...
Trading Center