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?
