Penny Stocks

Posted by Lochlainn on February 18, 2008 (03:10AM)

Hi,

I am new to this community and fairly new to investing. I've owned some stocks through A.G. Edwards but have never traded online before. I don't have a lot of money to work with and have been reading a bit about penny stocks. It seems that the potential to increase your intitial deposit can be much greater when trading penny stocks due to the fact that you can buy so many more than if you say bought one or two stocks at a few hundred dollars a piece. I have also read a lot of horror stories about "pump and dump" schemes where a group of individuals buy up a fair amount of a relatively unknown stock and then hype it through random posts on message boards and e-mail spam. Then when everyone rushs to buy it and pushes the price up, they sell their shares and leave all of those poor indivduals with a worthless stock. So that being said I am very apprehensive when it comes to the idea of investing in penny stocks. But there does seem to be the potential for legitimate money making when it comes to penny stocks. I wanted to start a forum topic about your experiences, advice, strategies warnings etc. regarding trading penny stocks. Specifically about starting with 300 to 1000 dollars. Also, does anyone have any thoughts on this site www.pennystocks.com which is run by a Peter Leeds ? real deal or gimic ? I appreciate your time and thoughts. Thanks

Posted by ReformedPatriot on February 18, 2008 (06:32AM)

I've not been to that website and I am a new investor too.

What I understand is this:

Penny stocks are generally considered any stock $5 or less. They are very risky and have usually have very little liquidity, which means if you buy a lot, you may not be able to quickly sell them all. Also, penny stocks are susceptibal to "pump and dump" jobs which seek to inflate the stock so some bonehead can sell it for a lot while the rest of the folks suffer. A lot of these companies are start ups and it's harder to find solid information with which to make a complete decision.

My portfolio contains one penny stock: SOYO (www.soyo.com) and I believe them to make a solid product and expect their company to pan out in years to come.

Just my .02 cents worth and that's all I am sure it is worth.

RP

Posted by Will Profit on February 18, 2008 (07:34AM)

I reccomend you go to SeekingAlpha.com Get quote and articles on symbol KALG.ob Read what a horror story/scam penny stocks can be ( gee, I don't want to get sued by KALG after reading the article so I'll say IF the stories are true). Check it out on other sites such as Yahoo finance...... for its "financials"

Posted by Lochlainn on February 18, 2008 (07:38AM)

Thanks you both for your replies. I appreciate your time and knowledge :-) Is it safe to say that most investors try to stay away from penny stocks then ? If you were starting off with a small amount of money, what would your basic strategy be ?

Posted by ReformedPatriot on February 18, 2008 (02:25PM)

I am starting out low too and am trying to increase funds fairly quickly over the next few weeks. I am realizing that I really don't have enough to begin with and $2,500-3000 would be more practical. Nonetheless, a great many expensive picks are pretty low right now and so I plan on buying a small position into one or so and ride it over the long term until I can actually buy stuff. You probably have more cash than I do, so...

I signed up for the two week free trial at morningstar.com. It gives me access to professional analysis that I can understand. It's been helpful and I would reccomend it to you. Also I read alot from Investopedia.com.

Posted by SoylentGreen on February 18, 2008 (03:31PM)

While you can get a lot of _a_ penny stock for just a little cash, the real way to play the pennies is to find the 10 best, buy all of them and hope 2 are 10 baggers in a year. The others will probably tank. So really, it's not as cheap as it seems.

Posted by StudentStocks.Blogspot.com on February 18, 2008 (05:34PM)

Reformed, I own SOYO too.

Posted by WallStreetKing on February 18, 2008 (06:14PM)

I use Bowser Report for small stocks, they do OK and over time do well. WWW.thebowserreport.com call or email for free one time newsletter. I subscribe and have his book which the method works well on stocks above $3 also. Plus they give a 5000.00 gurrantee if anyone doesn't make money in three years using there picks. not a bad deal.

Posted by ecoastmuscle1 on February 23, 2008 (12:01AM)

I recently bought into MTTG.otc. at .31 a share. There has been alot of hype going on about this stock. Its expected to go up 500% in the next few weeks. I've found several sites suggesting that this is a strong buy. Go to Maverickstocks.com and read up on this stock. It looks very interesting and I don't believe its a "pump and dump" stock........ Give me some feedback on this if you guys don't mind.

Posted by pdbiggy21 on February 27, 2008 (10:20AM)

I have been investing for the past 13 years. I just recently opened this account for more of my speculative plays. When I first started I wanted to try to get rich quick with penny stocks, but luckily I had good advice not to. If you really want to make money fast my friend look into options and stay away from penny stocks.

Cheap is expensive - You may think $500 in penny stocks is not a big risk, but that money can be spent much better elsewhere.

Learn how to invest - I guarantee you in a few years if you read more books, newspapers, TV you will realize penny stocks is not the way to go.

Posted by UTLONGHORN BULL on February 27, 2008 (04:36PM)

Personal experience..... Penny stocks sometimes hit, but personally I am trying to stay away from them. I started out with penny stocks, and occasionally, you will have some pop for big gains, but for the most part they are penny stocks for a reason. If you are going to invest in penny stocks, do plenty of research, and realize that some of the websites that pump up these stocks recieve payment to advertise these stocks..... Just my .02 cents

Posted by UNDERTAKER on February 28, 2008 (03:59AM)

I just sold some mttg got a feeling based on their cash flow & financials it might be a while before the stock takes off. Ill keep an eye on -if it starts going upwards of .40 soon ill jump on it again -Its hard to believe this stock tanked again with the media coverage and the possible growth potential-put it in the watchlist for now!

Posted by Haymore on February 28, 2008 (06:52AM)

For some views on the quality of low priced stocks go to this site: http://timothysykes.com/

He mainly shorts them - sometimes long and no I do NOT recomend you try to follow his style.

My gut feeling is that "pump and dump" as well as "hope & pray" out number decent stocks in the under $5.00 by at least a 10 to 1 ratio.

With the trading cost here at Trade King lot size makes no difference so 3 shares of IBM at $110 will cost the same as 100 shares of $1.10 and the cheap stock has a bid/ask spread that eats part of any gain you might make.

Having said that I just looked at my holdings and fully half of my stocks have prices under $10 and one of those is up 20% today

Posted by locogmac on February 28, 2008 (08:46AM)

For the type of exponential growth that you look for in penny stocks, IMO it'd be better to just find an good company with an upcoming IPO and get into that.

Posted by Anaheim Hills Calls on February 28, 2008 (05:02PM)

I'm a Cover Call Writer, But I have surplus left over each month.... I'm buying MTTG ... just bought 10,000 shares at .23 cents.

And will continue pumping more in if it's at the .20 cent mark.

The stock will take off , it's a matter of time. This stock moves .06 - .10 every week so channeling is an option too.

tTevor

Posted by Anaheim Hills Calls on February 28, 2008 (05:09PM)

Hey BIG Boy... I beleive your right. I've just bought 10,000 shares.... and I'm continuing to buy more each day / week. I'm in the industry... I'm a machanical engineer, and I love what they have to offer. So don't dispair, this WILL pay off.

Posted by Anaheim Hills Calls on February 28, 2008 (05:11PM)

I agree......

And don't get greedie either....

Good luck

Posted by Anaheim Hills Calls on February 28, 2008 (05:14PM)

Does anyone live in OC Orange County CA, let's get together........

Posted by OldPro on March 02, 2008 (03:41AM)

There's no free lunch..No matter how you might wish for it. What motivates most people is hearing the success stories/wishes of a VERY FEW people.

My advice to you is to roll up your sleeves and study first. Then try paper trading for a while. If not, what are you going to do when you lose the small amount of $ that you have now.

Start small, keep saving, after much study, keep investing until you find consistent success. An old, true market saying is: Those who try to make a killing, usually get killed.

Posted by optionstrategy on March 03, 2008 (01:05AM)

You see Locklain why u should not invest in penny stocks. U started this topic and look at all the pumping of particular stocks there are here and referrals to web sites. Stay away

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