Why penny stocks are a losing game

[TripleBuy]

I was reading the following article today on Fool.com :

http://www.fool.com/News/mft/2005/mft05121604.htm?ref=foolwatch

I was oblivious to what had happened with IES, which seems a stock many people on this board have, or used to have.

In light of the announcment yesterday, I think it is my duty to beg people not to gamble with thier investment money. The lure of the quick money may be inticing, but in the end companies like IES are just ways to throw away your money.

[the_menace]

Holy crap! This kid's a wizard.

http://www.cs.brown.edu/people/rbb/risd/Lebed.html

[englishman26]

"People who trade stocks, trade based on what they feel will move and they can trade for profit. Nobody makes investment decisions based on reading financial filings. Whether a company is making millions or losing millions, it has no impact on the price of the stock. Whether it is analysts, brokers, advisors, Internet traders, or the companies, everybody is manipulating the market. If it wasn't for everybody manipulating the market, there wouldn't be a stock market at all. . . ."

[the_menace]

"People who trade stocks, trade based on what they feel will move and they can trade for profit. Nobody makes investment decisions based on reading financial filings. Whether a company is making millions or losing millions, it has no impact on the price of the stock. Whether it is analysts, brokers, advisors, Internet traders, or the companies, everybody is manipulating the market. If it wasn't for everybody manipulating the market, there wouldn't be a stock market at all. . . ."

But financial filings is what moves the market. Its very important to assess a company's profitability to find out its future's outlook and where its going to be months and years from now. People who trade based on what and how they feel is mostly short-term successess that doesn't last very long. If you're going by feel, mine as well jump on IES where everyone jumps on for quick profit.

I don't believe in trading based on what their feel for the reason that financial statements (ups and downs), ratings, news and possibly analysts is the main reason why people do what they do. The market makes its judgment based on those components.

Investment money and trading money are both different.

[englishman26]

Mostly I agee with you. But it's a really interesting article actually about what constitutes "normal market forces" and about howthe so-called proffessionals have basically lost control of the market and the SEC along with them.

[TripleBuy]

Check out this article:

http://www.thestreet.com/comment/wrongrear/1326876.html

"Pumping and dumping is wrong wherever it is done. That's common sense and the law. If you violate it, you better expect the Feds will come calling. When they do, you should stop your behavior or pay the price -- not get a magazine article about you in your defense that makes your opponents look like Keystone Knuckleheads. In the Lebed case the good guys won. Don't ever forget that. "

[englishman26]

Another good article.

Thanks for posting these links Triplebuy.

[ChronicDDL]

I love penny stocks but you have to know what you are doing before playing, or say goodbye to all your money.

You need to be an experienced investor and know how to read the market, which is totally different then NYSE & other big boards.

You need to know which stocks are pump & dumps so you can stay away or buy in before the pump and sell before the dump (very hard).

You need to know what company’s are selling stock and performing reverse splits and then changing there symbol every time they perform a reverse split.

You need to monitor all the penny stock chat boards.

You must understand that the MM have full control and do whatever they want.

Greed is you worst enemy when playing penny stocks. We have all seen the 1000% gainer and when your stock is up 200% you think this could be the 1000% gainer and you don’t sell and you 200% gain turns into a 20% loss and you want to shoot yourself for being so greedy.

You must monitor your penny stocks every day if not 2-3 times a day.

You must get use to bashers and don’t believe anything you read on any chat board, but keep in mind that most people believe what they read and will follow the trend of the boards.

You need lots of luck; and I have found the more homework I put in the luckier I get.

[redrum]

Holy crap! This kid's a wizard.

http://www.cs.brown.edu/people/rbb/risd/Lebed.html


As A Stock Analyst on CNBC

[BOOOYAHOOO!]

[QUOTE=ChronicDDL]

Greed is you worst enemy when playing penny stocks. We have all seen the 1000% gainer and when your stock is up 200% you think this could be the 1000% gainer and you don’t sell and you 200% gain turns into a 20% loss and you want to shoot yourself for being so greedy.


Hmmm....very good point! Let's see if we can find an example of EXACTLY what you bees sayin. Oooh! This might be one! Check out the 6 month chawt on this stock AVNX! In Dec it was trading at .62. Looka da beeeyotch now! Well past that 200% threshold you mentioned! I wonder if this is the next one on its way to 1000% which means it hits 6.25! But what you say is true....and I'd be veeeery leary of anybody who would recommend a stock like this after it's already up 300% in 3 months....whata you think? :)