Penny Stock advice: Isn't it worth the risk?

[smartinvestor30]

There are some penny stock newsletters out there and although it's not sound investing (IMHO) at my age (23) I like to risk that $1000-$3000 on penny stocks. Let me give a quick example:

On 09/26/2006 U.S. Sustainable Energy Corp. started trading at $0.0004. A real sub-penny for sure. If you invested $1,000 in USSE on that day you would have purchased 2,500,000 shares. On 10/27/2006, one month later, USSE closed at $0.72. Your 2,500,000 shares would be worth $1,800,000 for a 179,000% return !

Now the above doesn't happen often but I've got many years to go before retirement and I'm won't cry if I lose a few thousand in speculation.

So based on that do you guys have any advice on penny stocks and penny stock newsletters?

[microhedge]

Familiar quote from otcstockexchange.com

Regardless of how true this is and how many times it has happened, the reverse can happen just as easily and much more quickly.

You say you have a few thousand to play with... how many times can you stand to lose a few thousand? 2, 3, 4 maybe? I can go to Vegas and make a fortune at the craps table too with a few thousand... if I'm lucky. Obviously risk vs. reward is huge in penny stocks and as I have said many times before, I have made an incredible fortune from these... but I have lost an incredible gut wrenching fortune as well.

I was fortunate to be a part of a real penny stock, HANS, I did not hold on to it long enough to see the prices it commands today, but it was a great ride and helped give me a huge capital base. I believe ETIM may be another real penny stock company with a future (thanks Stockviper:wink:)

What you have to understand is this, penny stock newsletters have no foresight to offer you, NONE. They do one of two things...

1.) report you the big movers from the day before, usually P&D schemes that are ready to dump because they have already been pumped! You see the rapid growth, you say Great I'm in, and they tank faster than you can say #$!%!!!!!!
2.)promote are ones they are being paid to promote.

THESE NEWSLETTERS HAVE NO SECRET, THEY HAVE NO CRYSTAL BALL, THEY ARE MIDDLE MEN PART OF A MUCH BIGGER GAME... A GAME THAT WILL BURY YOU!!!!

Again, I am not saying don't play the game... KNOW what you are playing first!!!! Go ahead and look at some of the penny stocks they recommend and observe and learn for awhile before you jump in... see if you can figure out whether they are real or not and if so why? See if you can figure out if it is a pump and dump and why is it a pump and dump, who is doing it and how long will it last? Watch how many sub pennies will soar when the company announces its closing, or bankruptcy or lawsuits. Watch, study and learn for awhile without throwing money at it, you will see huge things pass you by but resist the temptation, there will be more, there always is.

WHEN you are ready to play the pump and dump, play with $100 not a $1000, you can stand to lose that many more times. NEVER, NEVER, NEVER, NEVER play penny schemes and walk away. YOU CANNOT hit buy in the morning and expect to come home to a fortune! You want in, you gotta pay to play, you have to watch that screen every second.

http://www.smallcapwatch.com/company.asp?TICKER=aesk&p=&d=6m

Check out that link... you'll see a chart that looks like a table top with a sewing needle magically standing on end8O Classic P&D. News hit that American Skiing Company had sold there last piece of property for $$$$Millions$$$ in cash!!!! Wow how exciting, i'm jumping in because I see they've owned 7 resorts and have sold all for cash and they are an investment company that is going to turn around and do this again... I am in, I want to ride that train!!! Those who didn't read many previous releases and filings failed to see that with all that cash from the sale of all those properties for 100's of millions of dollars, AESK was so far in debt that cash wouldn't satisfy half of the demands against them. In two days AESK went from .006 to an incredible .197 and straight back down. How many people made a fortune? Some. How many people lost a fortune? Many.

I rode the AESK train that day because I read the release and back tracked all the other releases and broke out in a huge smile because I had found a textbook pump and dump. I didn't buy at .006 and I didn't sell at .197, I'm not a psychic and my stomach can only handle so much... I rode the middle and turned $2000 into just over $15,000 in a few hours. BUT I knew what I was doing, I watched, I studied, I learned, I assessed the risk and took it.

http://www.smallcapwatch.com/company.asp?TICKER=imgr&p=&d=6m

That link is a chart of a company benefiting from a paid advertising pump and dump scheme. These newsletters you're referring to, several of them were paid over $75,000 collectively to get the message out so to speak... well they did, to the tune of an increase from .15 to over $14 a share... and right back down again. Did I make money off of IMGR? You bet! But not because I believed they were real and had potential and they were an undiscovered diamond in the rough... I saw a text book "paid" P&D and I knew I could jump in and out of the middle of a soon to be sewing needle chart. Again... How many people made money? A Few. How many people lost money? Many.

Watch and learn how to be a part of the few, not the many.

8O 8O 8O 8O 8O 8)

BTW... I have just about every penny stock newsletter hit my inbox twice a day and I still love the rush of playing Pump and Dumps a few times a month when I spot a dandy. And I'll look for the gems too... like HANS and possibly ETIM :mrgreen:

Happy hunting... and keep your guns out, you're gonna need 'em!

[madcowdisease]

There are some penny stock newsletters out there and although it's not sound investing (IMHO) at my age (23) I like to risk that $1000-$3000 on penny stocks. Let me give a quick example:

On 09/26/2006 U.S. Sustainable Energy Corp. started trading at $0.0004. A real sub-penny for sure. If you invested $1,000 in USSE on that day you would have purchased 2,500,000 shares. On 10/27/2006, one month later, USSE closed at $0.72. Your 2,500,000 shares would be worth $1,800,000 for a 179,000% return !

Now the above doesn't happen often but I've got many years to go before retirement and I'm won't cry if I lose a few thousand in speculation.

So based on that do you guys have any advice on penny stocks and penny stock newsletters?

I see your point but I would be cautious in listening to "advice" from others. I'm just a couple years older than you though I've been investing/trading for over 3 years now. Because of my age and the multitude of portfolios I have I take a riskier approach than some might feel comfortable with. I have a trading account for just this reason, but, I am phasing that cash out and putting it in my Roth where I don't get taxed on short term trades and I rcently got options capability. I am aware the condemnation I may receive from some for trading in a retirement account but the tax advantage is one I can't pass up. I have two specualtive positions, and they are my largest holdings by far in this account. One trades on the AMEX and the other is an OTC BB that has strong prospects and has yielded me 20% this year alone.

The difference between my practices and those that you describe above are that I do my own due diligence. I do not listen to pump'n'dump BS. I scan and scout my stocks on my own and do not pay attention to anyone touting a "buy" rating. I simply look at a sector, Google it (it helps to use multiple engines - Jeeves, Lycos) and identify companies in that sector. I then record the names and go back to see if they are publically traded. If so, I then look at the financials (or what I can gather) and go from there. It is a time consuming process and much of what I find is relatively undiscovered. At least I'm not subject to the whims of some pumper.

Good luck.

[microhedge]

Sound investment advice MCD, I think that is a solid long term strategy.8)

[smartinvestor30]

Sound investment advice MCD, I think that is a solid long term strategy.8)


I agree, I don't think these companies have any real value to justify the increase in price. I just want to ride it as it rallies up. I understand the concept of pump and dump, I've known about it for a while. I think i will risk a few thousand in chunks of $500.

[Albert0373]

Great post micro!

[microhedge]

Smartinvestor says... I understand the concept of pump and dump, I've known about it for a while

Understanding the concept of P&Ds and knowing how to spot and play them are two very different things... please use caution and paper trade quite a few them before you put money behind it.

[sjzeno]

Hey,

where did you find out about this company - ETIM.PK

I checked their website out and i never seen anything like that before. It is a very interesting concept, a little unorthodox i guess it might take some time before people open up to the idea. Anyway it is a promising company i believe and i will keep track of this one.

[Patrick01]

Hey,

where did you find out about this company - ETIM.PK

I checked their website out and i never seen anything like that before. It is a very interesting concept, a little unorthodox i guess it might take some time before people open up to the idea. Anyway it is a promising company i believe and i will keep track of this one.

They've had a good deal of media coverage. Just recently I saw ETIM get a quick showing on Fox And Friends.

[smartinvestor30]

Smartinvestor says...

Understanding the concept of P&Ds and knowing how to spot and play them are two very different things... please use caution and paper trade quite a few them before you put money behind it.

Is it illegal to pay these companies to promote your stock (essentially paying them to pump and dump)?

Because I own a company and I want to take it public someday so I was wondering how to make a profit off of it.

[MyRightEye]

Is it illegal to pay these companies to promote your stock (essentially paying them to pump and dump)?

Because I own a company and I want to take it public someday so I was wondering how to make a profit off of it.

Does something need to be illegal before being simply unethical?

[smartinvestor30]

Is it illegal to pay these companies to promote your stock (essentially paying them to pump and dump)?

Because I own a company and I want to take it public someday so I was wondering how to make a profit off of it.

Lol, well if the US law says it's ok then who am I as an individual to argue :?

[stockrookie09]

here is some penny stock advice (http://www.6ammoneymachine.com/) that has worked for me. The company must be relatively easy to understand - after all, who needs a physics lesson. Is the company in a hot industry sector? If it's high tech or biotech, what kind of proprietary technology do they own? Number of patents? What does their customer base look like and how deep is it? Then, we read the recent news, which can steer us toward a better vision for the future. For example, has a technology company had new product releases? Or has a biotech neared a Phase 3 clinical trial or received an FDA approval? Also, we like a company to be over four to five years old, because that gives us an idea as to their staying power. And, needless to say, we look for any snags, which, in some situations may not be all that detrimental.

[will4real]

Healthy Coffee Launches U.K. Subsidiary & Establishes Local Offices
Tuesday January 13, 5:00 am ET
NEWPORT BEACH, CA--(MARKET WIRE)--Jan 13, 2009 -- Healthy Coffee International, Inc. (Other OTC:HCFI.PK (http://finance.yahoo.com/q?s=hcfi.pk) - News (http://finance.yahoo.com/q/h?s=hcfi.pk)) has registered a new subsidiary Healthy Coffee, U.K., Ltd., and established local offices in Dorset from which it will market and distribute its products throughout the U.K. Ms. Sorani Mkandawire has been named Vice President of the U.K. subsidiary and initial marketing operations are underway. The U.K. announcement marks the sixth new country into which Healthy Coffee has expanded within the past 6 weeks, including Japan, Canada, New Zealand, and the Philippines.