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The Penny Stock Portfolio - You're Own Mutual Fund!
TVOG - A penny stock on the move
Penny stocks - Design Your Own Mutual Fund
Like most investments, there are risks in penny stocks.
The portfolio I have set up has a variety of different businesses:
1) A shipping company
2) Numerous mining companies
3) Internet companies
4) Lithium battery companies
5) Construction company
6) New ventures into battery powered vehicles
Each has a story.
This is the key to setting up your portfolio. What are these penny stocks doing that will drive the price higher?
When I am talking about the penny stocks that I am investing in - I am mostly talking about companies that are currently trading below $.05 That's below five cents, a nickel. A plug nickel..........
Are these stocks worthwhile to trade?
Are they extremely worse than investing in DOW stocks, NASDQ stocks or mutual funds?
Altura Mining - An Opportunity To Invest in a New Lithium Mining Company Ready to Begin Production in 2018
The Dangers of Penny and "Normal" Stocks
Numerous dangers abound in the penny stocks. Listed on the OTC, basically pink sheet stocks, the arena abounds with scammers, pumpers and dumpers, misleading news stories and companies on the verge, or in, bankruptcy.
I would imagine that walking through a minefield would be a similar experience. But, remember, there are specialists that will clear that minefield for you. These people know how to tread and read the signs that will allow you to move through the minefield safely - if you follow their lead.
This is what I will present in my portfolio - the ways to tread through the dangers. I accept the fact that I will not miss all the bad investments. I will invest in companies that are scammers and pumper and dumpers. Its the nature of the beast - the nature of investing. I will make mistakes.
Remember the ENRON scandal? A scandal that lost money for many investors in the "normal" arena of investing. If not, you can read about the Enron Scandal here: https://www.investopedia.com/updates/enron-scandal-summary/
The major banks in the U.S. have all been charged with money laundering, rigging of markets, fraud and numerous lies to the SEC - the regulation arm that's supposed to make sure that companies listed on the major exchanges are "legit".
The SEC regulators don't seem to do their jobs that well.......The Bernie Madhoff scandal comes to mind. You are not even protected within the major exchanges from misdeeds by companies and investors. In fact, the banks have paid over $321 Billion for their illegal activities.
Recently, Wells Fargo has been in the news for opening accounts with clients money but not their approval. You can read about that here:https://www.reuters.com/article/us-wells-fargo-accounts/wells-fargo-uncovers-more-fake-accounts-in-drawn-out-scandal-idUSKCN1BB1QF
Forcing insurance to be bought by car buyers that was not needed. Wells Fargo seems to lean towards illegal activities. You can read about that here: https://www.nytimes.com/2017/07/27/business/wells-fargo-unwanted-auto-insurance.html
MF Global stole money for their clients accounts to cover margin calls. A company run by Ex-Goldman Sachs employee, John Corzone, the theft of clients money was done while SEC investigators were sitting in the companies offices! You can read about the MF Global debacle here: http://fortune.com/2013/11/15/how-mf-globals-missing-1-5-billion-was-lost-and-found/
Let's look at one of the darlings of Wall Street - Amazon.
Earnings per share/per quarter are $4.00. That's earnings per share for the present year of $16 per share.
The stock is currently trading at $1,168 and pays no dividends.
If the company remains on course, and the company gave you the $16 per share in earnings that they make, it would take you 73 years to just break even! ($16 in dividends for you (the total earnings per share per year) x 73 years = $1,168)
Does that seem likely to happen? I would think not.
Amazon is not going to give a $16 dividend. It's not going to open no new warehouse, have no more investing in trucks and drones.
As an investor, the only hope you have is the company continues to grow and the price of the stock continues to rise. Your chances of getting your money back is contingent on the price of of the stock going up.
The same can be said for most stocks on the big exchanges.
Let's look at the internet stocks - Facebook and Google. Here are two companies that produce absolutely nothing.
What their business model consists of is an advertising platform.
The draw for people to express themselves on social media is addictive.
Google does have one of the best search engines on the internet.
But, their goal of making money from either of their business models is contingent on clicks for advertiser's ads. And I don't know about you, but I rarely, if ever, click on an ad from either company.
In fact, Facebook has been investigating fake "clicks" on the ads for years, as is Google. You can read about that here:
What's an investor to do??
AIS Resources - penny stocks give you leverage
A look at U.S. Rare Earth Minerals - A Recent Winner!
Let's look at one of my stock picks - U.S. Rare Earth Minerals.
1 ) The way to find stocks to invest in:
What caught my attention with this particular stock was the increase in sales and the paying down of debt. I found the news on this subject on the OTC Market Boards under the daily news.
The announcement came out on Dec. 19, 2017 but I now see it is no longer shown on the news board. (A good reason to check it on a regular basis - the OTC sometimes takes news items down after they are put up!)
To verify what I've written here, the link to the investors update that came out on Dec. 19 is located here:
So, to get the news that may or may not move a stock, pay attention the the OTC Market Board news feed.
2) If I think there is a news item that will move the stock, as was the case with U.S. Rare Earth Minerals (USMN from this point forward), I'll check Investors Hub to see if there is a good following of the stock.
The USMN board has 15 followers - a relatively small amount. But, there is interest. There does not need to be a large following for the stock to increase in price.
If there's a board for the stock, that means people will post on it when good news hits, and thus attract more interest.
3) I use Barcharts as my main charting site. Barcharts website is located here: https://www.barchart.com/stocks/quotes/USMN
Barcharts gives you charting, a technical analysis "cheat" sheet and an opinion on the strength of buy or sell signals. Let's take a look!
A Penny Stock - USMN A Tremendous Increase in Price!
As you can see from the chart, USMN on Friday had a great move to the upside.
The days range was $.0139 for the low to as high as $.1476. That's an increase of over 1,000%.
Volatility in the penny stock realm can be very high!!
Let's look at Barcharts Buy/Sell opinion on USMN.
Barchart Opinion Current Strength and Direction are good!
Barchart's Opinion Is Good!
As you can tell from the chart above, the current opinion from Barcharts is a buy, with both direction and strength looking good!
Unfortunately, like most things in life, nothing is guaranteed when looking at this information. It looks good, but things may change dramatically.
What I am trying to do is limit my risks, not alleviate them. I know of nothing that alleviates risk when it comes to investing in stocks - whether they be penny stocks or stocks on the big boards.
But, the technical aspects that Barchart uses are giving a positive sign for the stock.
Limiting risk, not alleviating it!
Technical Analysis Cheat Sheet From Barcharts.com
Resistance and Turning Points
There's a fibonacci system. It appears everywhere in nature.
The fibonacci numbers are nature's numbering system. They appear everywhere in nature, from the leaf arrangement in plants, to the pattern of the florets of a flower, the bracts of a pinecone, or the scales of a pineapple.
It can also be used in charting - to determine turning points or resistance levels. View these as you would a living organism.
Nothing in the stock market goes straight up or straight down. (Though if you're an investor, it will never cease to amaze you at how long a stock can go up, or how quickly a stock can go down.) But, with the fibonacci numbers, it will give you a point of resistence on the way up or down, that can be used as a time to sell or buy.
You can tell by the chart above, the first resistance on the way up should be around $.1124 (This is going up to this level from $.0139)
Now, on Friday, Dec. 23 it shot through that and went above $.14.
Then it fell all the way back to $.028.
According to past experience, the stock is likely to go back up to test that $.14 level again, very soon. It's looking at past behavior of stocks that will tune you in on what to expect in the future price moves of that stock.
This is why fibonacci numbers are important and the resistance levels posted on the Traders Cheat Sheet should be kept in mind when investing.
Chaikin Money Flow
The last thing I check on before making a decision to invest in a stock is Chaikin Money Flow (CMF)
This can be positive or negative.
Currently USMN has a CMF of +.1213. Ive seen this go up into the +.60 range. And this is a positive sign that investors are putting their money into the stock. The higher the number, the more investors are showing their belief that the stock is heading higher.
Conversely, a negative number shows that interest in the stock is waining, and that the odds are the stock is heading lower. I've seen this as low as -.50, which means there is little if any interest in the stock.
With USMN, the interest is picking up in the stick with the positive news release. The question is will the other indicators confirm a positive move in the stock in the near future.
USMN Summation - All Indicators Point to Buy
To sum up my views and information that I use to limit risks.
1) The opinion form Barcharts is a buy
2) It has plenty of room to run up from .028 to the first resistance level of $.11
3) Activity and interest on Investors Hub
4) CFM is a postive +.12
5) Positive news coming from the company
I purchased 500,000 shares on Dec. 19, sold most of my position on Fri., Dec 23. I would consider buying into the stock again if it made a small move down at the open on Tuesday, Dec. 26.
All the indicators are showing positive for the company.
Indicators, News, Resistance, Fibonacci and CFM
All the information that I use on my penny sock picks can be used for any stock in the universe. I've learned over the years that the protection of my money is more important than catching a stock that is going up.
Don't lose money is as important as making money.
Sell when the stock turns against you. Make a decision, before investing, that when a stock goes down 20 % or 30% to get out of the stock before losing more money.
When it turns at the resistance on the way down, you can always buy back in.
Sell as the stock moves up, but hold onto a few shares in case it's a rocket ship heading to the stratosphere!!
With stocks trading for less than $.05, and much lower, 1,000's, 10's of thousands and even 100's of thousands share can be bought in companies that are beginning to grow again.
When a stock moves dramatically to the upside, make a decision, before investing, where you will start taking money out of the stock. I begin cashing out when the stock goes up 50%, I take more out at 100%. More at 150%, until I get all my money out of the original investment.
Then I sit back and let the profits grow while the stock grows.
I'll list the current price and shares of the stocks I have in my Penny Stock Mutual Fund.
I'l keep it up to date as I trade.
This will give readers the chance watch in actual time what can be done with a small amount of money invested in the right penny stocks.
Here's to your success!!