If you told someone you expected a tiny company with virtually no assets and income to go from being worth pennies per share to having a market value of more than $2 billion, they’d probably think you were drunk or high.

That kind of fantastic story is the stuff of spam e-mails sent by pump-and-dump scammers, or the realm of tiny newsletters — sometimes in cahoots with stock touts — where seemingly every penny stock is a rocket ship ready to launch.

But it’s also precisely what happened last week with Medbox Inc., US:MDBX , a company that makes medical-marijuana dispensing machines, which went on a fantastic voyage after it caught a mention in a MarketWatch story on how investors might participate in the expanding legalized pot trade.

Shares surged from about $4 to $215 last week — giving the company a market capitalization of more than $2.25 billion — before company executives played the buzzkill and made a statement noting that the price was soaring more because of the stock’s small float than the company’s “present business economics.”

The stock quickly fell back to $100, and has since been cut in half again, a trend that is likely to repeat itself over and over until the share price is more reflective of its fair-market value. That won’t be much for a company that will be lucky to break $5 million in sales this calendar year.

While that may be the $2.75-$3.50 range the stock was trading in prior to the MarketWatch mention, it could also be closer to the stock’s 52-week low of three cents per share.

Marijuana investing lessons from Medbox

Beyond the marijuana connection that fired up the public’s imagination, what fascinates investors about Medbox is that it is the rare penny stock that blew up into something where lucky buyers may have struck it rich.

That’s where the lessons are for investors who are tripping over this story.

There are thousands of companies like Medbox, tiny firms that have gone public but have little to no trading action on an ordinary day. In the old days, investors would have said Medbox traded on the “pink sheets,” a low-tech open marketplace for companies that did not require participants to be registered with the U.S. Securities and Exchange Commission.

Today, it trades on what is known as “OTC Pink,” where the higher level of trading efficiency makes a move like the one seen last week possible. The OTC Pink marketplace has no financial standards or reporting requirements, though it does categorize stocks by the level and timeliness of the information they make available to investors.

Dig into the accountant’s statement in Medbox’s most recent financials, filed Nov. 1, and you will find that “Management has elected to omit substantially all of the disclosures required by accounting principles generally accepted in the United States of America.”

Management isn’t slacking or doing anything nefarious — though the accounting statement rightly recognizes that “if the omitted disclosures were included … they might influence the user’s conclusions about the company’s financial position.” It’s just doing the same thing as thousands of other small, up-and-coming (or down-and failing) companies trying to minimize their regulatory burdens as they work their way into the mainstream of Corporate America.

For average investors, however, the realm of OTC Pink or its sister, the OTCQB — where companies must be registered with the SEC or a U.S. regulatory agency but where there are no financial or qualitative standards for being listed — is the Wild, Wild West.

It’s the territory of fantastic stories of companies supposedly destined to be America’s next great financial success. It is the place where a stock tout can easily acquire a lot of shares, and then spend money to promote the company to unsuspecting investors whose purchases wind up fueling the promoter’s gains.

Just as Medbox officials had nothing to do with MarketWatch editors deciding to pursue the story on investing in legalized marijuana sales, many stock touts simply act on their own, with corporate executives only figuring out what happened after their shares have popped.

The vast majority of these companies have some ardent supporters and believers, but limited long-term prospects. They have a small float and low trading volumes, which means they can pop when there is a sudden spike in demand, but which increases the risk that an investor paying a heightened price to get in will see the bottom drop out when the news high starts to fade.

It’s the realm of traders and stock jockeys hoping to turn a penny into a nickel before the ride ends.

Still, it’s a very appealing sell to ordinary investors who have seen the major stock markets struggle for years now and who are tired of risking about $90 per share on a giant like ExxonMobil XOM, +0.64% when they just received some pitch on something like Striker Oil & Gas SOIS, . That penny stock, which I wrote about several years ago after a big tout job, had its post-promotional pop, then calmed down; today, it is a less-than-a-penny stock, a common outcome for these issues. (See my column on Striker: Newsletters boost for tiny oil-and-gas stock strikes out.)

Throwing money into these stocks is, for most investors, an exercise in futility. They don’t recognize that they are the ones those traders and sharpies are getting their nickels from.

“People go into penny stocks and a lot of these small companies figuring that if they throw money into 10 of these things, they will hit one that will make it all worthwhile,” said Charles Rotblut, editor of AAII Journal, the publication of the American Association of Individual Investors. “The problem is that the successes aren’t 1-in-10, they’re more like 1-in-100.”

Consider the case of another “sin stock” that was having some interesting price action last week around the same time as Medbox.

Drinks Americas Holdings DKAM, — which I picked solely for having some of the same vice appeal as a marijuana distribution company — develops and distributes alcoholic premium beverages, and is involved in everything from Ed Hardy Silver Tequila and Willie Nelson’s Old Whiskey River Bourbon to Kid Rock’s American Badass Beer. It trades on the OTCQB, and last week hit a 52-week low before announcing a tequila deal that popped the stock from roughly 10 cents per share to nearly 20 cents on about three times its normal trading volume.

This week, as Medbox was coming down from its high, Drinks Americas was sobering up to a stock price closer to 13 cents.

That’s a common arc for a penny stock — no matter how legitimate the company — when there’s news.

Drinks Americas has a balance sheet that looks a lot better than Medbox’s, but its news was nothing compared to being featured in a MarketWatch story hinting that it was a way to play a business/industry that has people, well, buzzing.

For investors trying to catch the buzz on stocks like these, ask yourself what you know and when you know it; otherwise you buy into the frenzy and, almost certainly, get the worst of it.

Said Rotblut: “It doesn’t matter if you read an article on MarketWatch or you got some e-mail that didn’t get caught in your spam filter, with these thinly traded stocks you need to think about who else knew about these opportunities first, because if you aren’t one of the first people to act, you’re going to be the one left holding the hot potato.”