Pennystocks

studdlymurphy

Hi All,
Im looking at investing in a company with a share price of less that 1 US cent. I was/am planning on putting between 15-20k in it but Im reading alot of people saying that penny stocks are not considered safe purchases. I just wanted to know why?
Is it because of their volitility? Is it basause they are such low value that the company could go bust? is there other factors that could cause them to be unsafe?
Thanks for the help

studdlymurphy

Are these stocks hard to sell for instance if the price went up and I wanted to sell would it be possibe that I cant sell them as noone would want to buy or how does this work?

Raskolnikov

Firstly, penny stocks are usually not listed on the major exchanges like the NYSE, AMEX, NASDAQ, etc. because they don't fulfill the the minimum listing price of $1 per share. This means that in most cases, they trade Over The Counter (OTC) or on the Pink Sheets. Now there's nothing wrong with this per se, however, because reporting requirements for OTC and Pink Sheets stocks are less stringent, there is a higher incidence of pump and dumps and fraud.

If you want to PM me the name of the stock, or give it here; I'll let you know how risky it is.

Jim2007

studdlymurphy wrote: »

Are these stocks hard to sell for instance if the price went up and I wanted to sell would it be possibe that I cant sell them as noone would want to buy or how does this work?

Yes, that is more or less it! The market is small and the price can not be relied upon! For instance you may find that the price quoted on a given day is 200% higher than when you bought it, but when you try and sell, you can only get a fraction of what you paid! Thus you might find it difficult to get out when you wish to.

And as someone else pointed out the reporting requirements are minimal in this situation so it is difficult to get accurate information about the company. Combine that with a small market and it becomes very easy for someone to manipulate the market - often referred to as "Pumping and Dumping"! Thus you don't invest in penny stocks, you gamble!!!

If of course you have not problem in blowing 20K then go ahead, but I would recommend that you take the time to learn about investing and come up with solid investing strategy before you go putting 20K into the market.

In the current climate, with so many good companies on sale, I find it hard to believe that you can't find some good companies to invest in at a lower risk level while still achieving your investment strategy.

Good luck with that,

Jim.

studdlymurphy

Jim2007 wrote: »

Yes, that is more or less it! The market is small and the price can not be relied upon! For instance you may find that the price quoted on a given day is 200% higher than when you bought it, but when you try and sell, you can only get a fraction of what you paid! Thus you might find it difficult to get out when you wish to.
.

Is this actually the case have you experience of it or just what you hear? Does anyone have actual experience of this happening?

Bullish

Jim is 100% spot on with pink sheets and OTC .... the manipulation is unreal
Constant news letters promising 5000% gains sent to unaware investors purely to rip them off
Stay well clear IMO

I do play pink sheets but you need to have half an idea what you are doing.
So i shouldnt really play them as i have no idea what i am doing

poodles

studdlymurphy wrote: »

Is this actually the case have you experience of it or just what you hear? Does anyone have actual experience of this happening?

Studdly,
Some pennystocks (sub $0.01) will have little or no daily trading volume and hence will have little or no daily movement in SP.

I'd recommend that you did some research on a certain stock before you jumped into them.

I posted a link to a company that I think will be massive this year and I hope to see 400% gains by Xmas 2010.

http://boards.ie/vbulletin/showthread.php?t=2055932571

Jim2007

studdlymurphy wrote: »

Is this actually the case have you experience of it or just what you hear? Does anyone have actual experience of this happening?

Has it happened to me? No. Have I actually seen or heard of cases? Yes, twice!!!

- While a trainee accountant in Dublin, one of the other trainees got seconded to a stockbrokers, he got the 'bug', but because he did not have the cash the others had, he discovered penny stocks! At first everything was going great and after about 9 months he was nearly a 1000% (~£3,000) up, so with the holiday season coming along he decided to take himself and the moth (do they still say that in Dublin?) of to Spain for 2 weeks. He paid the deposit to the travel agency, with intentions of paying the rest with the sale of some stocks...... That is when £3000 became less than £200 and the holiday went south - cheap lesson in many ways.

- The second one I heard of was of a person seeking financial advice here in Switzerland as their portfolio was dropping!!! After an investigation my friend discovered that the guy had got an inheritance of a couple of 100Ks and decided to take some of the advice he was getting in the emails from "stockbrokers", this resulted in several thousand positions that were worthless!

Good luck with that,

Jim.

studdlymurphy

Thanks for all the help Im just getting it hard to understand that if a share was at a price you cant actually get that price for it

Bullish

Here is an example http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=bani&draw.x=0&draw.y=0

This stock is being pumped by promoters. The name of the game here is the promoters load up on the stock before the news letters are released they then ramp up the price a little and the gullible jump on board and buy the stock ramping the price ever higher. The promoters are then selling the stock to the newsletter readers. Then when the stock tops out they short it and crash the price back down.

The BANI stock above traded 264 million stocks today .... seems like a lot ?
254 mil x .0002 = $50,800 . There are a limited number of buyers so if your 20k euro 24k dollars worth of BANI ( for example) = 120,000,000 shares were tried to be sold in one lot, you would crash the share price as others would see your large sell relative to the daily float and sell below you to get out.

All that said, there are some legitimate penny stocks that do make it
But you would have more luck buying 20k lottery tickets.

Just my advice take it or leave it ... start off with some above 5 dollar stocks and if you can make some money try putting the profit into this crap shoot you are looking at

Raskolnikov

studdlymurphy wrote: »

Hi All,
Im looking at investing in a company with a share price of less that 1 US cent. I was/am planning on putting between 15-20k in it but Im reading alot of people saying that penny stocks are not considered safe purchases.

No offence and I'm not trying to be nasty here, but judging from the company you sent me, you don't have a clue what you're doing.

1. It's amazing at the extent of the lack of research people put into spending €20,000 on a stock.
2. I know it's boring and most of you guys are only looking for action and excitement, but you really do have to make sure that a company has revenues and profits before you buy it.
3. A 5 minute check on Google would have revealed that the company that you were interested in hadn't filed any financial reports in two years, has a web site that hasn't been updated in two years, and according to the last financial statement that they released two years ago, looked to be already bankrupt.

Seriously, I might have to consider getting into pumping and dumping myself, because the amount of people that are still getting fooled by these scams is ridiculous.

Chrysostomos

Bullish wrote: »

Here is an example http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=bani&draw.x=0&draw.y=0

This stock is being pumped by promoters. The name of the game here is the promoters load up on the stock before the news letters are released they then ramp up the price a little and the gullible jump on board and buy the stock ramping the price ever higher. The promoters are then selling the stock to the newsletter readers. Then when the stock tops out they short it and crash the price back down.

The BANI stock above traded 264 million stocks today .... seems like a lot ?
254 mil x .0002 = $50,800 . There are a limited number of buyers so if your 20k euro 24k dollars worth of BANI ( for example) = 120,000,000 shares were tried to be sold in one lot, you would crash the share price as others would see your large sell relative to the daily float and sell below you to get out.

All that said, there are some legitimate penny stocks that do make it
But you would have more luck buying 20k lottery tickets.

Just my advice take it or leave it ... start off with some above 5 dollar stocks and if you can make some money try putting the profit into this crap shoot you are looking at

Raskolnikov wrote: »

No offence and I'm not trying to be nasty here, but judging from the company you sent me, you don't have a clue what you're doing.

1. It's amazing at the extent of the lack of research people put into spending €20,000 on a stock.
2. I know it's boring and most of you guys are only looking for action and excitement, but you really do have to make sure that a company has revenues and profits before you buy it.
3. A 5 minute check on Google would have revealed that the company that you were interested in hadn't filed any financial reports in two years, has a web site that hasn't been updated in two years, and according to the last financial statement that they released two years ago, looked to be already bankrupt.

Seriously, I might have to consider getting into pumping and dumping myself, because the amount of people that are still getting fooled by these scams is ridiculous.

Great advice here,

I know literally nothing about penny stocks so I won't comment on them.

Have either of you looked a Timothy Sykes type strategy of shorting these over-hyped stocks ?

(Sykes turned like 12k into 1.6million or something similar during college, then after leaving college set up his own hedge fund that he ran from his apartment. He took huge losses and the fund had to be closed. He was shown on wallstreet warriors series one. He now runs some blog and makes money through selling training and alerts and the like :pac:)

heno55

if you still want the adrenaline rush of trading pennys after reading the previous very good posts try punting on the oilies trading on AIM. you will get the rush for sure, but probably still loose in the end, this is what i do but it is with money that i had written off before i even started.good luck

poodles

heno55 wrote: »

if you still want the adrenaline rush of trading pennys after reading the previous very good posts try punting on the oilies trading on AIM. you will get the rush for sure, but probably still loose in the end, this is what i do but it is with money that i had written off before i even started.good luck

Who are you into Heno?

pirelli

Hi Murph

Here is a great tip for a pre/post 2nd quarter entry. Maybe $7.55 entry or if the markets don't rally into the second quarter earnings then look for a lower entry.

MICRON - They are in the I phone

http://www.marketwatch.com/video/asset/revolution-investing-the-iphone-4g-play-2010-07-01/E091B88C-ADB5-4D6B-BABC-3C031C93259A

Pennies are strictly for day trading, you can pick Companies trading in OTC and pinks that are the future APPLE Microsoft Google ( that might once have been pennystocks also ).

I mentioned "strictly for day trading/swing trading" because you sell the same day or watch closely and sell soon after. The risks of holding are dilution reverse mergers and any type of news or technical features that can effect share price drastically.

Many OTC (pennystocks) are more transparent and some are fully reporting and you could hold these longer term but you would have to watch them like a hawq for news technicals and dilution.

I like NPHC, it is an fully reporting OTC pennystock and it is trading at .18 cents which is down from a high of 99 cents but is still bearish and my extreme optimism sees a price of .08 -.09 cents for an entry at .10 - .11 cents and more realistically .16 for an entry. NPHC has several weakness too many O/S shares some warrants and no earnings until next year. Although it is looking like it has a blockbuster drug and the feedback is very good. They are expanding very fast. Apart from the O/S i like really like NPHC but it's all about getting in cheap.

Your actually at a good time to try find some good bargains and if you buy into a rally you could set a profitable and secure stop loss. Most OTC will alow you to set a stop loss but pinks and stocks below a few cents are can not be set with a stop loss so you have to wacth constantly.

Raskolnikov

pirelli wrote: »

Pennies are strictly for day trading, you can pick Companies trading in OTC and pinks that are the future APPLE Microsoft Google ( that might once have been pennystocks also ).

That's not always true. There are real companies with real and profitable businesses that are trading as penny stocks.

I'm a massive fan of penny stocks. I actually have a few companies that have P/E's of like 5 or 6 which have consistant growth rates of 20-25% (these are recession numbers too!) in stable and boring businesses. Another great thing about these stocks is that usually the companies are so small, if you have a question, you can just give them a ring and get a direct line to the CEO.

pog it

There's a free weekly bulletin concentrating on penny stocks by Moneyweek called 'Penny Sleuth'. I don't get it but saw it the other day when I was signing up for their moneyweek mails!

Raskolnikov

pog it wrote: »

There's a free weekly bulletin concentrating on penny stocks by Moneyweek called 'Penny Sleuth'. I don't get it but saw it the other day when I was signing up for their moneyweek mails!

Highly speculative picks with lashings of technical analysis and dubious macro calls.

Most people here would love it

pog it

Raskolnikov wrote: »

Highly speculative picks with lashings of technical analysis and dubious macro calls.

Most people here would love it

Well I definitely don't know enough to start into penny stocks but I think it's something everybody considers when they first get into investing.... Not worth it frm what ye are saying unless you really know what you are doing.

Still, Money morning bulletin can be quite good so I thought that Penny Sleuth could possibly be worthwhile...

Has anyone ever gone with their recommendations, and how did ye get on if so?

heno55

at the moment i am in Gkp.FOGL,PCI,Vog, Hawk,IAE.sold out of NPE and Encore and RKH for a very tidy profit,some of the others are not doing so well and the Italians pulled the rug out from under PCI,but i will still hold you just never know

Bullish

Pennnysleuth and all the others are promoters .....
If they actually could pick a stock out of their ass ... they would not need to charge anyone else for their services

poodles

heno55 wrote: »

at the moment i am in Gkp.FOGL,PCI,Vog, Hawk,IAE.sold out of NPE and Encore and RKH for a very tidy profit,some of the others are not doing so well and the Italians pulled the rug out from under PCI,but i will still hold you just never know

Should be an interesting week for FOGL next...nervy movements towards the latter part of this week.

I still have a small holding in Encore (profit that I let ride from last friday week)
Hopefully another rise this week coming

Heavy in RRL - I think the potential upside is massive. Recent small acquisation in Texas again a few weeks ago to underpin and de-risk at current sp with a further larger acquisation to be announced in coming week(s)...then Puntland and Georgia are the makers.

heno55

poodles wrote: »

Should be an interesting week for FOGL next...nervy movements towards the latter part of this week.

I still have a small holding in Encore (profit that I let ride from last friday week)
Hopefully another rise this week coming

Heavy in RRL - I think the potential upside is massive. Recent small acquisation in Texas again a few weeks ago to underpin and de-risk at current sp with a further larger acquisation to be announced in coming week(s)...then Puntland and Georgia are the makers.

i have them on my watch list but atm i am concentrating almost exclusively on the falklands