penny stocks some basic rules

[selkirk]

just finished reading The Guide for Penny Stock Investing (Donny Lowy, 168 pages, 2000).
not a bad book, has some spelling mistakes and is ten years old so some of the info maybe dated.

got this from the library but would not buy it...
got me thinking about some rules for penny stock investing...here are mine.

note: penny stocks are high risk plays so you should set stops and be prepared to lose a good percentage of your investment....

Rules
1. know what time it is...this can be used for regular stocks... does the market like your sector, for instance if gold starts to fall sharply and you are looking at a jr. gold..why? best to get on a stock just before the market falls in love with the sector.

2. avoid bear markets, similar to know what time it is...had a friend who put money in a jr. geothermal play...there is not earnings, rev..., ect. avoid concept stocks in bear markets, they will drop more sharply that the overall market...

3. never dollar cost average....these stocks can be pushed around and sometimes a great story comes undone, please do not dollar cost average... at worse you keep the faith and only lose the orginal investment, if it comes back you were correct... seen people lose their whole portfolio chasing, the losses from one stock... move on.

4. float the float
was called by a pr spokeperson, about a company, jr. 4th round of drilling...a penny stock, they need cash for the next round of drilling, early stages, ...still. float currenty 114 million shares. before the next round of financing. move on. smaller the floats the better, this company will have a 300 millionn float if not more and still be looking...then comes the reverse split and you are dead.

5. management: so many of these companies have people who are not good. so get good management, also are they good operators, or are they good promotors...nothing wrong with both...just know what you are dealing with...

6. facts, limit the facts
one time my shareclub won a contest, we pick a uranium stock, it went to .25-$3...(I sold mine soon after 3-4, then went to over 7 and now below 2). anyways had good land postion and experience management, and a sr. company took a position...however you know why it went up, peope fell in love with uranium stocks, and hello.

know what time it is, so an investor calls me from another city, telling me facts, apon facts...and wanted to know what I knew...told him good manament, land, sr. company, that it...


information is good, but some of it is just hype and find that people that could write a 20 page book about the company sometimes fall in love with the stock.

7. have a plan
know when you are going to sell, or take profits, or run for cover. this goes for all stocks, have an idea of what you will do if good or bad happens to the stock.

there are probably more but have to get ready for a bbq. happy canada day everyone, and best July 4th to everyone...celebrate both days...

thanks
selkirk

 

[Kid Bro Sweets]

good read as usual and Happy Canada to you as well Selkirk

 

[DOGS THAT BARK]

just finished reading The Guide for Penny Stock Investing (Donny Lowy, 168 pages, 2000).
not a bad book, has some spelling mistakes and is ten years old so some of the info maybe dated.

got this from the library but would not buy it...
got me thinking about some rules for penny stock investing...here are mine.

note: penny stocks are high risk plays so you should set stops and be prepared to lose a good percentage of your investment....

Rules
1. know what time it is...this can be used for regular stocks... does the market like your sector, for instance if gold starts to fall sharply and you are looking at a jr. gold..why? best to get on a stock just before the market falls in love with the sector.

2. avoid bear markets, similar to know what time it is...had a friend who put money in a jr. geothermal play...there is not earnings, rev..., ect. avoid concept stocks in bear markets, they will drop more sharply that the overall market...

3. never dollar cost average....these stocks can be pushed around and sometimes a great story comes undone, please do not dollar cost average... at worse you keep the faith and only lose the orginal investment, if it comes back you were correct... seen people lose their whole portfolio chasing, the losses from one stock... move on.

4. float the float
was called by a pr spokeperson, about a company, jr. 4th round of drilling...a penny stock, they need cash for the next round of drilling, early stages, ...still. float currenty 114 million shares. before the next round of financing. move on. smaller the floats the better, this company will have a 300 millionn float if not more and still be looking...then comes the reverse split and you are dead.

5. management: so many of these companies have people who are not good. so get good management, also are they good operators, or are they good promotors...nothing wrong with both...just know what you are dealing with...

6. facts, limit the facts
one time my shareclub won a contest, we pick a uranium stock, it went to .25-$3...(I sold mine soon after 3-4, then went to over 7 and now below 2). anyways had good land postion and experience management, and a sr. company took a position...however you know why it went up, peope fell in love with uranium stocks, and hello.

know what time it is, so an investor calls me from another city, telling me facts, apon facts...and wanted to know what I knew...told him good manament, land, sr. company, that it...


information is good, but some of it is just hype and find that people that could write a 20 page book about the company sometimes fall in love with the stock.

7. have a plan
know when you are going to sell, or take profits, or run for cover. this goes for all stocks, have an idea of what you will do if good or bad happens to the stock.

there are probably more but have to get ready for a bbq. happy canada day everyone, and best July 4th to everyone...celebrate both days...

thanks
selkirk

An interesting read Kirk

I have one portfolio that is made up of 14 stocks that ave around $3 a share--with highest being $8 and 5 under a $1.

They are not typical penny stocks as all have PE under 15 and about 1/3 PEG under 1 and a few pay dividends.

This is my fun portfilio as retirement portfilio is pretty boring now for most part.

As you noted above they are subject much more to market movement than earnings or reports. Past 2 months has had - 11.3 return.

--the point about highlighted was especially noted as got myself in a trap right now-

have stock I really liked NEP (Northeast Petroleum) that I bought @ 1.52 went as high as 11.59 --and took nothing off the table

--now stock (5.50) is halted on trading with several pending lawsuits over mistatement of earnings--Only had $1,500 invested and was trying to hit home run and did not implement stop on it.
--Live and learn

 

[selkirk]

KBS hope you had a good holiday, like (love ) Canada Day and Vitoria Day weekend, maybe because of the weather in May and July.

DTB when a stock doubles I take ussually some off the table, wait for a pause and then sell some off...saying that remember Greenstone resources (time machine back to 1996),

me and a friend buy the stock at 4.25, he bought much more than I did, also bought some at 3.80-3.95...anyways it went down orginally from 4.25 to about 3.90 and he wishes he was never in it, but decides to keep it...

the stock goes from 3.80 to 20 in about six/seven months...I tell him to sell half at 7 like I did, the stock stopped and looked like the run was over, well just wait a few weeks, and it began again.

in most cases if a stock goes up sharply I will take some off the table, and often sell half when it doubles, the only exception is if it just rockets higher and makes new highs every few days, then will wait.

my biggest mistake is selling some after a 25-50% move higher(nice problem to have) and then watching as it goes higher.

still like to get my orginal invesment off of the table when possible. many of these stocks will go on a run and then all the way back to zero.


will start a thread on penny stocks, some good ones with earnings, ie. divs. and some that are a pure ( and in most cases ) a foolish gamble.
thanks
selkirk