|For anyone new to the game, here is my take at this whole pennies game.|
1. If you are playing pinks, realize that you are basically trading the highest risk stocks out there in the market. MOST are unethical in one way or another with very few being legit companies starting from the bottom while not out to screw the shareholder. Likely 80% of pink sheets are there just to raise money through dilution - often, you don't see it coming, it just happens, often you will see it in stock promotions and the amount of shares given to the promoter for free. Its real easy to spot the bad companies. Go to http://www.pinksheets.com and check the 'company info tab'. You will find the outstanding share count there - see if it is current. If it is, they likely keep up with their filings - check the 10k's say 6 months back under the filings tab...how much did the outstanding shares go up? If the outstanding count is out of date, they likely hide everything and best you could do is go to the ibox for that company at investorshub and see if they have an updated count. Check the reverse splits - if they have several such as JUNP, you know damn well all they are doing is printing paper and nothing more. Unless you are involved in a promo with them and know the timing of crap, move the hell on.
2. You see a pinky moving, but no news? Check the chart - is it a technical bounce play? Those are common legit trades in the pinks and can often make big money. Try to figure out why it went down in the first place though. If there is promotional activities or they have a bad history of diluting, trade that bounce real tight because it CAN go much lower than you expect. I have seen stocks fall 95% in days from dilution/dumping alone. As crooked as investorshub is, get to know it well - get a pay account so you can do an all-in-one ticker search. Go back to the first message that started the buzz - is it a material event, or just a guy pumping a dead stock? They will often run pumps in groups, whether it be the forum, or in a chat room. Be aware as to where the pump originated. Most that you see here likely started over there anyway.
3. Pinky with news? How strong is the news? Is it the opening of a new website? Whoop de doo...likely just a promo fluff piece. Is there a contract? How much? Does it name a company? Look into the companies named - even call them or send an email to see if they are legit. I believe I single handedly was responsible for GVBP.PK having to retract a PR because I contacted the company mentioned in the PR and they said it was erroneous and it will be rectified. The retraction PR came out that night - coincidence? I doubt it. If you can verify the news whether it be through defencelink website on a military contract, or perhaps PR as well on a big board stock that the pinkie referred to, its golden. Jump all over it. Even if the PR is hard to prove, if it looks great and somewhat believable on paper, jump all over it as soon as you see volume and ride the wave. Even if its fake, it may never get revealed that it is and it may go up piles before the bashers come out. You can play the scams, you just have to be smart with your trading. Don't buy more if you are in the hole - dump for the loss and move on - lesson learned. I have no problem losing $100 3 stocks in a row if the next one pulls off $1000 gain.
4. 000x stocks. I have mentioned before, these are strictly lottery tickets. It is hell to make money here - rarely do they get out of the range and it is just a setup for a nice big reverse split to repeat the dilution process over again.
5. Shells - these are empty companies with clean balance sheets waiting for a private entity to do a reverse merger and become publicly traded. They CAN be a goldmine as was the case with HMDI. They are also lottery ticket material. There are a few forums on ihub that devote themselves entirely to shell trading. Some of them know the game well and can see signs of possible mergers. I am not familiar with what to look for, so best to read up on their ibox to learn more.
6. OTC's - these are 'safer' plays because of transparency. For the most part, you can trust the PRs - they are required to file with the SEC - you can find all the necessary info and make better educated choices. More and more of these are turning up crooked though, so you still have to be careful. SPNG is one of the biggest out there this year. A sponge with soap - yee haaaaa, yet they had massive volume every day, talked about nasdaq uplisting, lots of advertisement and deals with pro baseball clubs, and the clincher was a massive display during the US Open for all to see. Obviously there was something there, but as the too good to be true story panned out, the SEC suspended and delisted them (I'd say this was mostly a share printing program): http://www.sec.gov/litigation/suspensions/2009/34-60788-o.pdf
GVBP was another classic, but that was actually a boilerroom play on the OTC...pretty damn hard to pull off but the warning signs were all there and I took alot of abuse on the various forums trying to prove that. Here is their SEC notice
Sometimes, you just never know, I still struggle with ISCR - I am suspect with it, but no concrete evidence yet and lots of strength in the stock which you can't ignore - I grabbed some around 13 just incase - hate to miss a big ride if it were to actually come. Just because it may be a scam, doesn't mean you must steer clear. Plays can take months and months to get exposed...sljb, aqui, spng...all went on forever before they got shutdown. Just remember to take gains and never risk more than you are willing to lose all at once (because you CAN get a halt and an open 90% lower!)
Hopefully that will get you started on the right foot here. You WILL lose big on some plays - its inevitable, all you can do is learn from it. Take some off the table when the gains are there, don't gamble for the home run if the company doesn't smell right. Feels better to miss a double than lose all the money in your trade. I still don't have pennies mastered and I played them a hell of a lot a few years ago. I have improved greatly though in minimizing damage. That really is the key. Yes, there are people pumping a stock here - some on good grounds, some just a crap shoot and maybe they are just looking for someone to dump their shares onto - be smart about it - speculative ihub rumor up 1000%, don't dive in no matter how hard he's pounding the table, real news that you can apply a valuation to (like AVMD) certainly take a shot even if its already up couple 100%....I still tripled there even though it had already doubled when I found it.
Now make some money!
Share This Post:
What I post is an opinion only, by no means a professional opinion! I choose to put an emphasis on fundamentals, and even if something screams a buy, I've learned that the stock may not move just because the fundamentals say it's undervalued.
If I post about a stock, it doesn't necessarily mean I hold shares - I often like to just discuss plays for the sake of conversation. This is a forum of discussion...for ideas - do you own DD and take responsibility for own trades.