- Leland Teschler, Editor

But engineering experience can be surprisingly valuable when making decisions about the stock market. The same common sense that applies in the lab and on the factory floor can help steer you clear of "investment opportunities" where the payoff is dubious at best.

To see what I mean, consider the claims of a flyer that came to us through the mail recently. It sang the praises of a penny-stock company making a gadget said to save energy when attached to an electric meter. There was plenty in the brochure's hype to arouse skepticism among those willing to do a little digging.

For example, bold letters proclaimed this device is protected by a patent. The implication, of course, is that the Patent Office wouldn't issue a patent if the device didn't really work. Engineers know better: A quick search of the U.S. Patent Office Web site reveals the company actually just owns a patent on the name of the device. And a perusal of the brochure's lengthy fine print eventually turns up words to the effect that the "wonder device" isn't guaranteed to do anything.

Misleading patent claims aren't the only way sleazy stock promoters try to make questionable developments seem legitimate. You should also be suspicious when a company you've never heard of boasts that bigname manufacturers are evaluating its technology for licensing. The words "licensing" and " evaluating" together in the same sentence should make your BS detector go off. This is especially true if the technology has never been demonstrated anywhere but on a lab bench.

Claiming the concept is legitimate enough to attract interest from firms with good track records is just the halo effect: You've never heard of us, but you've certainly heard good things about the company we're working with. And no question that companies with nothing to hide do indeed license their technology once in awhile.

But large companies evaluate new technology all the time, even if the ideas behind it seem like a long shot. The mere process of evaluating a new technology doesn't say anything about its worth in the real world. And engineers don't need to be told about what can go wrong as a concept makes its way from R&D to the marketplace. Many times promising notions just don't pan out economically, especially in high-volumes.

Perhaps the biggest red flag is a lack of sales. It is surprisingly easy to find examples of microcap issues with share prices that are rising, though they have yet to sell anything but their own stock. When tempted to take the plunge on one of these, just stop and reflect on how difficult it is for your own employer to make a sale, even with established products and an experienced sales force.

Despite all this, you might someday be tempted to take a flyer on a cheap stock. So here is one last bit of advice: Keep the amount of money you squander on the idea to no more than what you'd put into a hobby.