By Angie Pearson

Copyright, 1998; Brookstone Resources, Inc., All rights reserved.

Part Two: Investing 101: Some Basics to Follow Before You Have to Cut Your Losses

 So, you're a member of the investment community, or you're strongly considering becoming one. Whether you're a seasoned "veteran" or a "rookie," there are some basic guidelines you should follow, questions you should ask the selling agent, when considering placing a significant amount of your hard-earned money into the hands of an investment. Have a pen and piece of paper ready to take notes and keep them in a safe place, you may need them if there is a dispute later about what was said during the transaction or, use the Form for Taking Notes, from the Securities and Exchange Commission (the "SEC") at

I can't stress enough that you do your homework before making any investment. In the short time I've been in the industry, I've heard too many heartbreaking stories and have seen too many investors who bought the "too good to be true" lines from a less than ethical selling agent, broker/dealer, sales representative, stockbroker, account executive, or registered representative.

Find out about the disciplinary history of any sales representative by calling 1-800-289-9999, a toll-free hotline operated by the National Association of Securities Dealers, Inc. (the "NASD"). They can provide you with information on disciplinary action taken by securities regulators and criminal authorities. Also, state securities regulators can tell you if a sales representative is licensed to do business in your state.

Never invest in something that you don't fully understand. Get information from sources such as business, financial and industry publications. Load up on information regarding the basics of investing and simple financial terminology from the bookstore or your local library. Ask the selling agent for, and take time to read, the company's prospectus or offering document, both of which are highly regulated by the SEC and must contain specific, required disclosures by the Company that pertain to the offering and to the Company in general. Don't rely solely on the selling agent's pitch, the prospectus or offering document can answer most of the questions you may have including:

  • How will this investment make money?
  • What must happen for this investment to increase in value?
  • What are the specific risks associated with this investment?
  • What is the maximum I could lose (vis--vis, changes in the stock market)?
  • How long has the company been in business?
  • Is the company's management experienced? Have they been successful in the past? Have they ever made money for investors before?
  • Is the company making money? Or does it carry a large burden of debt? How are they doing compared to their competitors?

You may want to obtain additional company information, including press releases, from Hoover's online at www.hoovers.comor retrieve additional company reporting information from the SEC's Electronic Data Gathering, Analysis, and Retrieval system ("EDGAR") at These services however, apply only to public companies. Keep detailed and complete records of all the information you have gathered including written accounts of the conversations you've had with the selling agent.

Beware of the selling agent who insists you invest quickly so as not to miss out on a "once in a lifetime deal." If it promises to double your money in six months, if the sales pitch attempts to entice you by promising you will not lose money on it, or if it just seems, even the slightest bit, too good to be true, it probably is. Never invest based on a "hot tip" from a selling agent whether it be "inside" or "confidential information." Never base your decision on a favorable "upcoming" research report, market analysis, prospective merger or acquisition, or on any informal company announcement.

 Remember, all investments entail some degree of risk. Read carefully the section in the prospectus that relates to Risk Factors. Remember that the higher the expected rate of return, the greater the risk.

 Understand that no broker/dealer, salesperson, selling agent or other person is authorized to give any information or make any representation concerning an offering other than what is contained in the prospectus or offering document.

No one invests to lose money; if you take some or all of the suggestions above, you may reduce your chances of having to "cut your loses."


Brookstone Resources, Inc. is a capital formation advisory firm providing specialized advisory services to new and emerging companies, market intermediaries and individuals primarily in the areas of oil and gas, real estate and technology development.


 For further information contact:

Angie Pearson
Brookstone Resources, Inc.
3777 Sparks Drive, SE
 Suite 130
 Grand Rapids, MI 49546
 (616) 940-3399
 (616) 940-3592 fax

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Copyright © 1997, 1998, 1999, and 2000 by Lewis G. Mosburg, Jr. and Ogden, the Invisible English Sheep Dog

"Lewis Mosburg's OIL & GAS NEWSLETTER"™ and "Lewis Mosburg's OIL & GAS PRIMERS"™  are trademarks of Lewis G. Mosburg, Jr.