Anyone else here investing in the smallcap & penny stock markets?

bigscoop

Gold Member
Jun 4, 2010
13,373
8,689
Wherever there be treasure!
Detector(s) used
Older blue Excal with full mods, Equinox 800.
Primary Interest:
All Treasure Hunting
OP
OP
bigscoop

bigscoop

Gold Member
Jun 4, 2010
13,373
8,689
Wherever there be treasure!
Detector(s) used
Older blue Excal with full mods, Equinox 800.
Primary Interest:
All Treasure Hunting
Re: Anyone else here investing in the smallcap & penny stock markets?

About 15 years ago some friends at work and I started playing with penny stocks, small caps, billboards, etc.,....and for the most part it was a win on one and lose on the other....all very volitile stuff but fun to play around with. Then in 2007 the plant closed and we all went our own way and I thought nothing more of it. However, just last week, as I was cleaning out my old homepage settings I came across "My Portfolios" from 2006 and I was stunned at what I saw looking back at me.

One of my prortfolios was titled "Free Asset Folder" which I created in 2006. The way this file was setup was like this: Stocks were purchased $300 at time, and then only enough of that particular stock was sold off when it went up to recover the original $300 plus the buy/sell commissions, or about another $18. So what ever amount of stock was left over was retained for a the long haul without too much fear because it was basically a free asset. This was then done only in theory with about 40 companies and then this folder was put away and forgotten about when the plant closed. Well, last week, when I opened that folder again it was up over 800% eventhough 18 of the companies had apparently gone belly up or changed names and 11 others were deep in the red. So of the original 40 companies 29 of them were complete losers, which left only 11 to carry the load, and of those only four saw enough growth to prop up the entire portfolio. This leaves us with only a 4% winning ratio and only a 23% chance of picking a stable or winning penny stock. However, when applying the theory of the free asset folder the overall risk is drastically reduced even in light of the high failure rate. This folder lost badly on 73% of it's selections and yet it still made a great return. Something to think about, perhaps?
 

calisdad

Bronze Member
Sep 8, 2010
1,237
442
Groveland, CA
Primary Interest:
All Treasure Hunting
Re: Anyone else here investing in the smallcap & penny stock markets?

I consider pinks and bb's to be pretty much gambling where you don't know all the rules. You know what they say about poker: look around the table. If you can't spot the sucker its you. ; )

Most of the movement I see is from advertising tho shorting when you get bombed with stock ads might be a good idea. Problem with pinks is they don't have the reporting requirements of Nasdaq etc. stocks.

So what was your buying criteria?
 

OP
OP
bigscoop

bigscoop

Gold Member
Jun 4, 2010
13,373
8,689
Wherever there be treasure!
Detector(s) used
Older blue Excal with full mods, Equinox 800.
Primary Interest:
All Treasure Hunting
Re: Anyone else here investing in the smallcap & penny stock markets?

I never bought pinks.....not that bold. :laughing9:

As far as criteria, depended largely on the individual company and business sector so it varied quite a bit. As I'm sure you already know, rarely will you find an "actively traded" "financially stable" small cap with a good profit margin, steadily growing revenues, and a good debt/asset ratio, but this is where I usually started. In most cases strangling debt/liability is just a fact of life for these smaller companies so a lot of times it required digging deeper into what was possibly in store for these companies over the next one -five years, but again, their business sector and individual position in their marketplace also played a factor, and as you know, most of the information on these companies is rather questionable and suspect at best. In truth, in the end it usually came down to just high risk guesswork, which is why I created that "free asset folder" as a means of trying to find a way of limiting the risk.
 

Top Member Reactions

Users who are viewing this thread

Top