Showing posts with label Lessons Learned. Show all posts
Showing posts with label Lessons Learned. Show all posts

The Truth About Investor's Hub

Tuesday, April 14, 2009 0 comments

Can I be nice about this? Probably not.  


I’ve posted often about message boards and forums, and the danger that lies within them. I wanted to share today’s experience, in hopes that you will recognize the forces that lie within our market system, and how deception and corruption are at the heart of it.  

Before purchasing a stock, I typically will cruise the message board circuit to see if there is any pertinent information regarding the company’s financial information, new products, problems, etc. Today, I was researching on the I-Hub website regarding a stock that I had been involved in earlier, ERPL. Knowing that they had recently issued a press release regarding the impending impact to shareholders, I channeled through the posts and couldn’t find this news. There hadn’t been any activity today, so I decided to post this bulletin, and gave technical information that appears will help the stock for the short term.  

I was met with angry replies from the moderator, named “Cowboy”, who then told me I was crossing the line, and was a “basher” or someone that issues negative information to drive down the price. I then receive a nasty gram from another poster, named “prls123”, who also accused me of the same thing, and that I could take my business somewhere else. I was repeatedly asked to defend my position, and how wrong I was. Before I could sufficiently provide any additional information, “Cowboy” had deleted all of my posts, and stated that he was “cleaning up the board”. I’ve experienced hard responses from I-Hubbers, but this was over the line in my opinion. Here I was, a shareholder, and I was being told that I couldn’t post relevant company information.  

Now, if you look at my Covestor application on this site, I own shares of this company, and do want the stock to succeed. But this was irrelevant for these knuckleheads. This is a prime example that I wish to share with you….95% of message boards are fluffy and all great things for a company are “right around the corner”. Maybe the company stock will “go through the roof”. You’ll often hear, “if the price goes lower, I’ll pick up more shares”. DON’T BELIEVE IT. The worst thing for new investors, or even ones that have traded for awhile, is to fall into the trap of message board “hope”. I often tried to find solace in message boards after I had purchased a stock, and the value seemingly tanked. This is what message boards thrive on, and it’s false hope. They are anxious to provide false hope to newbies, and they have skilled themselves in such a way to make real people, with real information look like a negative force to a stock.  

I had previously linked Investor’s Hub on this blog. They have effectively been removed. I have only one message board that I frequently rely on, and that is Dr. Pennystock’s forum. If you are looking for sound advice, and trustworthy sources, look no further. The attendees are real people, with real money, and pumping and bashing are prohibited. As a regular on his board, I find it to be the best forum on the web.
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FORUMS AND MESSAGE BOARDS

Wednesday, April 8, 2009 0 comments

In a brief conversation tonight, my mind quickly goes to the video that is currently posted on the blog, called the Anatomy of a Pump & Dump stock, by hotstockmarkets.com.   It's a great synopsis of all message boards that have any regularity to them, and probably one of the most powerful driving forces to a stock.  


I began a quest early on when I got involved in penny stocks, to see if anyone had any "insider" information (which I knew would have been illegal for anyone to disclose, but it never stopped me from looking).  Then I found message boards...places such as Yahoo or InvestorsHub that give opinions, facts, and DD (due diligence).  People fantasize about company earnings, speculate on new products, twist and turn company reports inside out....They are the soap opera of the stock market world.  

My own personal rules on message boards:
  • Nobody has inside information.  Doesn't matter what they say, ip addresses are recorded and people can get into some serious trouble if they are caught (like Martha Stewart, ;-)
  • Any data can be twisted to suit the messenger.
  • The saying, "If it looks to good to be true, it probably is." Applies heavily to penny stocks.  There are PR firms that are used to pump a stock up, and it's value.  They disguise themselves as normal "Joes", some to "bash" (or talk really bad about a stock, and it's worthless value), others will pump (make it look like it's the best thing next to Microsoft). 
  • There are no easy ways to make money, so regardless of how much your particular stock will skyrocket, by the time you get to be able to trade it, it's too late.  300 - 400 - 500% baggers are rare, and difficult to predict.  Chances are, if you make 300%, you will gamble to make 400%.  And typically by the time the stock takes a downward turn, it's too late for you.  Lock in your profits.  When sideways trading begins to occur, jump ship.  You will thank me.
I fell into this trap more than once.  FMNTQ, HNSS, IGTP, others....TAKE YOUR PROFITS.  Peaks, and high reaching peaks, are signs of reversal.  Make this your rule of thumb, and you won't be sorry. 

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VALUABLE LESSONS LEARNED

Saturday, March 28, 2009 2 comments

Over the last year, we have witnessed one of the worst market conditions in nearly a century.  Early in 2008, predictions were being made that the bottom was here, and that we should begin to see some market improvements, and should pull out of a period of slow growth.  Little did anyone know that we were already in a recession, and that we would see our markets nearly collapse due to tight credit conditions, sharp rises in energy prices, and foolish banking practices. 

 

It was in early 2008 when I entered with a small sum of money to begin trading, as it was apparent to me that if the bottom was “here”, I could begin making a successful side business in trading.   I was met with some early success, so I then funded my account with a much larger sum, as it seemed my dream of working from home was getting much closer.  Then the floor dropped from under me.  I never lost all of my money, but there were times when I was scraping the bottom.

 

I’ll share some vital things I learned here, in hopes that you won’t do what I did.   These are real life stupid mistakes I’ve made, and have since read about them. 

 

Rule #1:  Never trade money you cannot afford to lose.  Seriously.  Don’t miss this one.  If you are not an experienced trader, find some simulation stock trading systems and practice for 3-6 months.  Don’t worry about the good deals.  There will always be good deals.   No quick money scheme has ever worked, no matter what those paid advertisements tell you, and neither will the stock market.


Rule #2:  Never, ever, use market orders.  This is like paying $400 to scalpers outside sporting arenas for $25 dollar tickets.  Don’t do it.

 

Rule #3:  Never buy first thing in the morning.  Eighty percent of the time that I have been in stocks, market makers (traders that manipulate stocks) sell high first thing in the morning, and drive the price down in the middle of the day.  Dips typically happen in penny stocks between 10:30am and 12:00pm.  Depending on the market activity, dips can continue into the afternoon, so watch and wait carefully.

 

Rule #4:  Avoid premarket and after hour market trades. The same people that take your money in market orders, will take your money outside standard market hours, and laugh all the way to the bank. 

 

Rule #5:  Message boards are full of pumpers and bashers.  There is very little useful information, aside from speculation, assumptions, and surmising (sounds like a church get-together, doesn’t it?).  Pumpers want you to buy for two reasons, to either make the stock go up, or so you’ll buy it and they will short the stock, drop the price, and take your shares.  Bashers want the stock to go down so they can get cheap shares, for exponential gain.   Glean what you can, but be careful….this leads to my next thought….

 

Rule #6:  Leave emotion out of your stocks.   I was physically sick when the floor dropped out of my stocks last year.  Why?  It was money I put in, and didn’t have it to lose.  Second, how do you come home and tell your wife you lost a good part of your savings?  Stocks go up, and stocks go down.  Set your limits on what range you should get out of a stock before you purchase it.  In my opinion, most stocks decline 80% of the time, and rise the other 20%.  So make sure you can read when a bottom is close. 

 

Rule #7:  Find stock buddies.  These are good voices of reason.  Find people that make sense, and won’t tell you what you always want to hear.  I’m more into technical analysis, whereas my stock buddy is more into the fundamentals of company ratios.   Both can lead to great gain if used correctly.  Some stocks are moved by sell pressure points, others by news and press releases.  Look at history to find out what moves a stock.   

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