Archive for the ‘Common Stock’ Category
Penny stocks – Features of & Scamming
Posted by admin in Common Stock on January 10th, 2010
Penny stocks are generally defined as stocks that trade on the OTC BB or Pink Sheets exchange. Some other regards this scheme as a common stock that trades for less than $5 a share and is traded over the counter (OTC) through quotation services such as the OTC Bulletin Board or the Pink Sheets.
What Are Penny stocks?
In the UK markets, a penny stock, or penny shares commonly suggests to a stock and shares in small cap companies. These companies with a market capitalization of less than £100 million and/or a share price of less than £1 with a put forward spread greater than 10%. Financial Services Authority (FSA) declares a standard regulatory risk warning about penny shares to the public who take part.
Penny stock scam
It is very common that penny stocks are frequently persistently supported as part of dishonest pump and dump schemes. Some fraud companies adopts Pump and dump schemes. This scheme, involves use of false or misleading statements to build up stocks, which are “dumped” on the public at exaggerated prices. Such schemes involve telemarketing and Internet fraud. There are other such schemes whose sole purpose is to cheat people. In the chop stocks scheme, stocks are bought for pennies and sold for dollars to overseas or domestic retail investors. This leads to the high benefit for both brokers and stock promoters massive profits.
The payment of brokers usually is made “under the table” secret payoffs to put up for sale such stocks. The subject stocks usually have small or no liquidity earlier to the block purchase. After the block is bought, the firm’s partaking brokers will sell the stock to their brokerage customers at the then-current quoted ask price, to the often victimized investors who are generally unaware of this practice.
There are various ways to promote fake penny stocks that are employed by companies. The usual penny stock scam are postings about a stock from unknown, fake or misleading press releases issued by the company, spam e-mails and junk faxes that hype absurd and fake claims, dishonest newsletter writers who support a stock for a fee, paid posters, or foreign buyers all in attempt to drive up the share price while the insiders sell.
Master Penny Stocks Online By First Understanding Micro Cap Fraud
Posted by admin in Common Stock on January 9th, 2010
Because of the speculative and volatile nature of penny stocks online, they are very prone to market manipulation. You must understand the primary types of micro cap fraud before you start buying penny stocks online.
Micro Cap Fraud 1: Chop Stocks
Chop stocks involve brokers who buy discounted stock in blocks then turn around and upsell it to novice investors who don’t understand the penny stock’s low value. Many parties can be involved in chop stocks and many deals are done under the table to execute them, all at your expense.
To avoid chop stocks, only deal with established major brokers and be sure to do your own research rather than let someone try to sell you on a penny stock. In particular, you’ll find sketchy brokers trying to snare newbie investors online in stock forums and on penny stock newsletters.
Micro Cap Fraud 2: The Pump and Dump
The most frequent penny stock fraud involves the pump and dump. Savvy investors target a lesser known, low value stock than contrive hype to generate a rush of buys from less savvy investors. This drives that stock’s value up for a very short time. When it spikes upwards, the one’s pulling the strings dump their stock for a profit.
Because penny stocks feature low liquididity, you can find it difficult to release a stock you’re trying to dump in a hurry. So be skeptical when a penny stock newsletter (a common vehicle for the pump and dump) strongly pushes a new stock.
Where Can You Buy Penny Stocks Online?
Penny stocks, which are simply common stocks with a value under $5, can be found on the over-the-counter quotation services (sometimes called the OTC Market). The biggest and most common of these are the Pink Sheets and the Over-the-Counter Bulletin Board (OTCBB). Note that stocks appearing on these quotation services often don’t have to fulfill the same requirements or be filed with the Securities and Exchange Commission (SEC) which is one primary reason why they can be so speculative and prone to manipulation.
Don’t let yourself be exploited by scammers when you enter the world of trading penny stocks online. You really can score significant profits with penny stock trading, but you must be responsible, cautious and thorough in your due diligence.
How to Find Good Stock Investment Ideas
Posted by admin in Common Stock on January 8th, 2010
We all know that opportunity does not come knocking every day. The phrase ‘lightning never strike twice on the same place’ illustrates the point. Investors are successful because they can identify opportunity as well as the courage to act on it. This article is written to identify what constitutes a good turnaround stock investment. Here are several steps necessary in finding your next stock investment.
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Scour the 52 week-low list – This is a useful preliminary screening where you identify stocks that has fallen. While stocks that fall have their own specific problems, it is generally better to buy low rather than high.
Calculate Its Net Cash. The next step would be to gauge the strength of the company’s balance sheet. This is done by calculating the company’s net cash. Net cash is calculated by adding cash equivalents, short term investments and long-term investments in the asset column and subtract it with long-term debt. If possible, you need to find stocks that has a positive net cash valued at 10% of its market capitalization or more. All the companies in our stock portfolio has positive net cash.
Calculate Earning Per Share Going Forward. This step is critical in determining the fair value of the common stock. It is also the hardest part to master in stock investing. Generally, you predict earning per share by constructing your own pro-forma income statements where all its components are based on your prediction of the company. At the bottom of the income statement is the profit/loss figure in which you can convert to earning per share.
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Calculate Fair Value. When you obtain your earning per share figure, you can then calculate the fair value of the common stock. Fair Value differs for various investors depending on their investment objective. With current interest rate environment, I set the fair value when the company can give me a return on investment (ROI) of roughly 7.5% year after year. To give you an idea, an ROI of 1 % means that for every $ 100 you invest, you will get $ 1 back annually. For common stocks, this means that for every $ 13.4 of investment, common stock holders will get $ 1 in profit. As you may know, this translates into a fair Price Earning Ratio of 13.4.
Determine Your Entry Point. You have found the fair value of your stock. It is now the time to decide where and what price you want to buy your investment. Investors’ job is to make money. Therefore, we should not buy a stock at its fair value. We should sell at fair value or if heaven permits, at overvalued level. But, we should buy at below fair value. This depends again on your investment philosophy. If taking 10% return is fine with you, then you can buy a stock that is trading at 10% below fair value. I personally think that investors should buy a stock that is at least 30% below its fair value. This is because of the uncertainty in the earning per share figure of a common stock. As you may remember, we need to predict this earning per share at step # 3. We compensate our inability to forecast earning per share by buying our stocks 30% below fair value.
Other investors might have different ways of picking for their stock investment. But the basic idea is still the same. They want to buy lower than their expected sale price. In our case, our selling price is when a stock reaches its fair value. A lot of investors mistook fair value as the buying point. Hopefully, reading this will change your perception about that.
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Where to get the best picks for penny stocks
Posted by admin in Common Stock on January 7th, 2010
Penny stock is a form of “common stock” that is becoming popular in the United States; it is referred to as a common stock so that it can be differentiated from what is called the “preferred stock”, which is a type of equity security. Even though preferred share holders are most likely to get their money before the common stock holders in a bankruptcy situation, the common stock tends to give a better performance than the preferred stocks when averaged. Penny Stocks are traded over the counter and are usually for a small amount of money, roughly four dollars or less, the trading is usually done through the “over the counter” bulletin board or the Pink quote by the Pink “over the counter” Markets and the stocks that are traded on a daily basis can rank in the millions. The Glamour of penny stocks have appealed to a lot of new investors because the prices are low and the returns can be very high, however, all you new investors should be aware that penny stock is dubbed as a high risk investment and you can suffer tremendous loss, if you are not guided in the right direction. You as a new or returning investor should really give yourself an advantage by signing up for the Purely Penny Stocks Dot Com Newsletters; put yourself ahead of the game with some extra knowledge. Purely Penny Stocks Dot Com is mainly geared towards discovering stocks that are not yet at the forefront and then making them known on the stock market. While they look at many different types of penny stocks, they tend to place their attention on stocks that will produce high returns for the readers of their newsletters. In essence you will know about the stocks that are going to be the highlight of the market soon before they become the highlight, this way you can be an early bird. This is not something that has just been picked out of a hat because there have been great results, just last month in December; some of the picks that were highlighted in the previous newsletters produced a gain of more than 300%. 2009 was a great year for the picks at purelypennystock, their was EXPU that yielded 47%, and this is merely a good gain, even better was the OPLO which yielded an immense 160% gain, but the MVP was the DOLV which yielded a whopping 325% last year. With percentage like these, this newsletter appear to be a priceless commodity. Well 2010 is here and the newsletters are starting to roll out, make your self apart of this year’s success, by signing up and getting your own slice of the pie. Just a little insight for the prospective subscribers, they are currently looking at Alumnifuel Power Inc. For those who are new to the trade name, it is AFPW.ob, they are expanding and have made quite a few developments that have made them something to watch out for, and they have even produced their first Hydrogen Generator with the aid of a new chemist. For more information on this and other companies to look out for, visit purelypennystocks and sign up for their monthly newsletters.
Penny stock is a form of “common stock” that is becoming popular in the United States; it is referred to as a common stock so that it can be differentiated from what is called the “preferred stock”, which is a type of equity security. Even though preferred share holders are most likely to get their money before the common stock holders in a bankruptcy situation, the common stock tends to give a better performance than the preferred stocks when averaged. Penny Stocks are traded over the counter and are usually for a small amount of money, roughly four dollars or less, the trading is usually done through the “over the counter” bulletin board or the Pink quote by the Pink “over the counter” Markets and the stocks that are traded on a daily basis can rank in the millions.
The Glamour of penny stocks have appealed to a lot of new investors because the prices are low and the returns can be very high, however, all you new investors should be aware that penny stock is dubbed as a high risk investment and you can suffer tremendous loss, if you are not guided in the right direction. You as a new or returning investor should really give yourself an advantage by signing up for the Purely Penny Stocks Dot Com Newsletters; put yourself ahead of the game with some extra knowledge.
Purely Penny Stocks Dot Com is mainly geared towards discovering stocks that are not yet at the forefront and then making them known on the stock market. While they look at many different types of penny stocks, they tend to place their attention on stocks that will produce high returns for the readers of their newsletters. In essence you will know about the stocks that are going to be the highlight of the market soon before they become the highlight, this way you can be an early bird. This is not something that has just been picked out of a hat because there have been great results, just last month in December; some of the picks that were highlighted in the previous newsletters produced a gain of more than 300%.
2009 was a great year for the picks at purelypennystock, their was EXPU that yielded 47%, and this is merely a good gain, even better was the OPLO which yielded an immense 160% gain, but the MVP was the DOLV which yielded a whopping 325% last year. With percentage like these, this newsletter appear to be a priceless commodity.
Well 2010 is here and the newsletters are starting to roll out, make your self apart of this year’s success, by signing up and getting your own slice of the pie. Just a little insight for the prospective subscribers, they are currently looking at Alumnifuel Power Inc. For those who are new to the trade name, it is AFPW.ob, they are expanding and have made quite a few developments that have made them something to watch out for, and they have even produced their first Hydrogen Generator with the aid of a new chemist.
For more information on this and other companies to look out for, visit purelypennystocks and sign up for their monthly newsletters.
How To View Stock Market Formulas Professionally
Posted by admin in Common Stock on January 6th, 2010
A famous Wall Street story concerns a young man who was in the early stages of learning to be a professional speculator. He had a problem, so he went for advice to an elderly sage noted for his shrewd investment judgment. The fact was, the young man said, that he had taken on quite an extensive line of stocks, but the market looked high – maybe too high – he thought possibly his position carried with it too many risks, and wondered if he shouldn’t perhaps sell. He was so worried about this, he said, that he couldn’t sleep nights.
The old man’s counsel was simple and direct: “Sell,” he said. “Sell back to the sleeping point.”
Although there is no doubt that this advice smacks of imprecision, there is a good bit of wisdom in it. We may fairly assume that neither the young man nor his adviser knew for sure which way the market was going, but both were aware that the market was sufficiently shaky to cause legitimate worry. Translated into somewhat more orthodox investment terms, the advice meant: “Sell enough of your stocks so that a market collapse won’t destroy you, but keep enough so that if your fears turn out to be groundless, and the market rises, you’ll still profit to some extent; in the meantime, get some sleep.”
At first glance, it may seem cynical on the old man’s part not to outline for his protege an exact and detailed course of action. But he could not honestly guarantee that he knew exactly what action might turn out to be best. Furthermore, the young man didn’t want someone to tell him precisely what to do. All he wanted was some help in easing the pressure at a critical point, and the help he got seems eminently sensible.
In a real sense, the investment formulas are designed to help you in the same way that the old man’s advice helped his young friend – they inject an element of caution in your investing when caution seems advisable, they reduce the provision for caution when risks seem relatively low, and permit you to benefit from rising prices for common stocks. Moreover, once you incorporate a formula into your investment program, it works more or less automatically, thus allowing you to sleep nights in the knowledge that you are continuously hedging against various possibilities.
But just as the investment sage left it up to the young man to decide exactly what the “sleeping point” might be in his particular case, you can select a formula appropriate to your own temperament, financial circumstances and proclivity to insomnia. As will be made clear in later pages of this book, any of the formulas can be adjusted to suit the needs and preferences of any investor.
Although formulas are designed to give unhedged and unambiguous indications for action, the investor should not feel that he is therefore giving up all personal control over his investments when he adopts a formula, since he selects it himself to fit his own requirements. A formula does not try to tell you what to do – it merely helps you do what you are already doing more profitably.
For example, formulas cannot tell you which stocks to buy. This book assumes that anyone interested in formulas is already a relatively sophisticated investor and knows what kind of stocks he wants to buy, how to select them and where to go for advice in his particular areas of interest. But – by supplementing his knowledge of which securities with considerations of the equally important questions of when to own them and in what quantity – formulas can supply a valuable added dimension to his investment results and help put the management of his portfolio on a more professional level.
Use a Checklist of Stock Trading Tips
Posted by admin in Common Stock on January 5th, 2010
When you regularly trade stocks, it is important to keep a checklist of common stock trading tips close at hand to help you make the best purchases and trades. A sample checklist of these tips could be:
1. Watch the scholastic lead band. Experts say that when this lead band crosses the 20 band, this is the prefect time to buy. If you notice the band is below 80, then this should be your signal to sell.
2. For each stock that you hold, it is important to hold charts in different time periods. If you have charts for 1 minute, 10 minutes, 30 minutes and 60 minutes of trading, you will have a much better view of how well the stock is performing. If you trade seems to be bucking the trend, then you shouldn’t hold on to it for very long if you don’t want to lose money.
3. Start off trading stocks with lots of shares in the low bracket, such as the 100’s. Don’t jump in with both feet and order 1000’s because you run the risk of losing a lot of money if you don’t have enough experience under your belt to know what you are doing.
4. Be wary of consolidations. Most experienced traders do not make trades during periods of consolidation. The best thing to do is to study the trends. Trends are identified by higher highs and lows for an upward trend and lower highs and lows in a downward trend. There should be wide channel between the 5 and 15 moving averages for a strong trend. You can also enter the trend when a breakout price occurs or wait for the price to pull back a little.
5. When trading you have to know where your exit point will be as well as your stop loss value. Although enduring losses is a part of stock market trading, you don’t want to hang on to a losing trade hoping things will turn around because it is possible that they won’t.
6. Become familiar with the futures. On the NASDAQ, futures do play an important role as the stocks usually move upward or downward with the futures. For example, you should never short a stock if the futures are in a strong upward trend.
7. Consider the trading action of the previous day as well as what is happening at the present time. Subtract the high from the low of the day to find stocks with a rage of $1 or more. Those with larger ranges have more possibilities for earnings.
8. If you notice that some stocks have a significant gap at the open, these are good opportunities for trading because they are likely to have a good swing in both volume and price. The gap is defined as the difference between the amount a stock closed for one day and the amount it opened at on the next day.
9. Look to the Asian and European markets if you want to make a prediction of where the US markets will likely go. In the past US futures have trade downward overnight, but have rebounded in the morning.
The Blue Chip Stock, R.i.p
Posted by admin in Common Stock on January 4th, 2010
Have you ever heard of a “Bo Derek Stock?” Me neither. But it’s a term listed in the seventh edition of Barron’s Dictionary of Finance and Investment Terms. When I was in college, we had to buy this book, and I’m embarrassed to say that the early edition that I bought back then did not seem half as thick as the current version. And I think the reason for the bloat of the new edition is that many dated terms have yet to be deleted.
So, what’s a stock that meets the Bo Derek category? The dictionary says it’s a…
“Perfect stock with an exemplary record of earnings growth, product quality, and stock price appreciation. These stocks are named after the movie “10” in which Bo Derek was depicted as the perfect woman.”
I’m sorry, but I’ve been in this industry the better part of two decades and no one – no broker, institutional sales guy, or banker, has ever used this term. If I happen to run across one of these magical perfect investments in the next two years, I’ll be sure not to compare it to a 52-year old, albeit still attractive, actress…
The term is simply no longer relevant. Just like the term Blue Chip.
A Blue Chip, so says the dictionary, is “common stock of a nationally known company that has a long record of profit growth and or dividend payment and a reputation for quality management, products, and services…”
Have you seen any of these lately?
Constellation Energy? That fails on the management test, although there might be some redemption there. General Motors and Ford? They fail on the management test, too and, until recently, failed on reputation for quality products. AIG? Fannie and Freddie? Lehman? Just fail, period.
Beyond the definition of Blue Chip is a connotation that has developed over many decades, fostered by companies the likes of General Electric. The connotation is that Blue Chips = Safety.
The notion that there are safe places to invest in the domestic equities market is dead forever. It died when Bear Stearns collapsed over a weekend, and Lehman Brothers filed Chapter 11.
The Blue Chip idea died along with those two companies. Take IBM, for example. It’s not the technology king it once was, granted, but Big Blue has been a classic Blue Chip ever since I got into this business. While its stock has taken a hit, the company has largely been above the fray – untarnished in the media by the digressions of the big financials and flawed business models of the domestic auto makers. But can anyone say IBM is a “safe” place to put your money? Not anymore. The collapse of 2008 will scare an entire generation away from investing.
From a capital markets sense, this could be the best thing that ever happened. No matter how polished a CEO is, no matter how much economic impact a company wields, and no matter how interwoven it is in American society, no company – public or private – is a no-brainer investment. This is the lesson… (cough – along with not over-leveraging yourself to buy assets you can’t afford)… that America needs to take from 2008.
So forget Blue-Chip stocks completely. Just forget the entire concept.
But do not forget about investing in the U.S. equity markets. And here’s why…
It’s true that U.S stocks got blasted in 2008. But of the 200 top stocks that actually appreciated in 2008, 196 of them have market values of $2 billion dollars or less. That means, of the top 200 best-performing stocks of 2008, 98% of them were small-caps. In a list like that, you do have to separate the bulletin board issues with no volume from the legitimate trades, but the fact remains that several small-caps performed tremendously in a horrid market. Below is a sample of the list:
Small, Micro, and Nano-Cap Stocks Fill the Top-200 List for 2008
So even in the worst market conditions most of us have ever lived through, small-cap investing shined. Looking back over the last 10 years, the Dow Jones Industrial Average has a 10-year annualized return of –0.45%. The S&P 500’s is –3.02%. Both indexes were decimated by 2008, contributing to the much talked about “lost decade” for investors. The Russell 2000, on the other hand, which is known as a small-cap index, has a 10-year annualized return of +1.72%. If you look back at any 20-year period in stocks back to 1926, small-caps did better than large-caps almost all of the time.
Is small-cap investing risky? Yes. It always has been and will continue to be. And so was a whole portfolio filled with shares of BSC…
Until next time,
Matt Mason
Analyst, Oxbury Research
Penny Stocks – an Unknown Investment Game
Posted by admin in Common Stock on January 1st, 2010
In the U.S., a penny stock is a common stock that trades for less than $5 a share and are traded over the counter (OTC) through quotation services such as the OTCBB or the Pink Sheets. Although a penny stock is said to be “thinly traded,” share volumes traded daily can be in the hundreds of millions for a sub-penny stock, thank you Wikipedia.
Investing in Penny Stocks is of course, like any stock investment, risky. Especially so for the Penny Stocks because you won’t have as much information on the company as you do with the major stocks. But with risk, can come reward. Penny Stocks are one of the few stocks that double in price overnight. And it happens alot compared to a normal stock.
Trying to Invest in Penny Stocks is a lot like playing the Lottery, unless you can find someone or something that trades in ONLY PENNY STOCKS. The world’s first Stock Picking Robot, which they have named MARL, does just that. And Marl is very good at what he has been created to do, as all robots should be.
Marl has the uncanny ability to pick stocks that will double or triple in price overnight. That my friend is a real talent that I wish that I had. But if I did, you wouldn’t be reading this now because I would be on my Island relaxing from the long day on the beach. Anyway, Marl studies thousands of stocks continuously and looks for patterns and has been programmed to know what to look for and when to look for it and he announces what to pick and when to get out at a profit.
I know this sounds unbelievable but Marl has real data to back him up and he has real MILLIONAIRE friends to vouch for his ability. Lucky for you you can lease a Marl for yourself for the low low price of only $28,000.00. Whats that you say? I know. Me neither. So that would be the end of our little story if not for the kindness and generosity of the two Geeks. You see, Geeks aren’t usually greedy. Once they get all of their high-tech toys and latest game systems and fast cars they don’t really see the point in not sharing the wealth.
Now it really is Lucky for You. They will let you subscribe to their newsletter that announces to you which stocks are going to double or more. This newsletter has been so successful it has been featured in Business Week and the Wall Street Journal. The only caveat is Marl wants you to report back to him if you really do invest in the stock so that he can continue to improve his algorithms. Not bad. The more you tell him the smarter he gets.
The best part is you can try the Newsletter FREE for 60 days!!!
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Understanding the Different Types of Stock Trading
Posted by admin in Common Stock on December 31st, 2009
For a beginner in stock trading making decisions in an organized and sensible way can seem to be an overwhelming task, full of mystery and dangers. You may wonder where to even begin. One of the most helpful ways to get past this initial fright is to study the stock trading wisdom of experienced and successful investors. By absorbing the ideas and knowledge of seasoned traders you can form your own ideas about the style of stock trading that will best serve you in your particular situation. And you will probably also enjoy the study!
Focus on Growth
Growth centered trading involves finding companies poised to grow and expand their profits and buying stock in those companies. As they grow the value of their stock will rise and bring the stock trader profits. This may sometimes mean taking the considered risk of buying into a newcomer among businesses if that newcomer shows promise. After all, new companies can often grow rapidly because they bring new products and services that people will greatly appreciate. Growth centered trading has the potential to bring great rewards but carries a high risk of failure also. A trader who pursues a growth-oriented stock trading strategy must have the confidence to trust his own gut instinct rather than seeking reassurance from verifiable facts. Growth-oriented stock trading is not for the faint of heart.
Focus on Value
A stock trader pursuing value focused investing is always on the look out for under-priced stocks. He looks for companies that can show a performance better than their stock price seems to indicate. The idea is to buy these stocks and then make a profit as the market recognizes the quality of the undervalued company and the stock price rises. One typical way to search for these companies is to find those whose stock price is significantly lower than that of its major competitors. At the same time care must be taken to insure that the company in question is an honest and trustworthy business so that no hint of improper dealings will make the stock price fall instead of rise. Value focused stock trading carries a moderate risk because of the honesty concerns. If a value focus appeals to you be prepared to do some serious research as you evaluate potential purchases.
Focus on Income
Income oriented investing is the most conservative of common stock trading strategies. Since a steady income is the objective an income investing style will focus on the biggest and most well known of companies, those that dominate their particular market segment and can be counted upon for steady growth and profit. The emphasis is always on acquiring prestigious stocks, allowing them to increase in value and then realizing the profits and reinvesting in the same type of high quality investment. Although no stock trading style is without risk, income oriented investing is considered to be the lowest risk of all major types of trading.
After studying the ideas and practices of traders who practice all of these types of investing you will be better equipped to find your own comfort zone using a style that suits you. This may well involve mixing some of the principles of two or more of these major focuses into your own unique mixture of priorities and principles. On the other hand, perhaps one of these stock trading styles will seem the wisest to you and you can delve into it more deeply as your trading career progresses.
Whatever you decide always keep in mind that no one else can make the wisest decisions for you. Take the time to study the success of others and form your own ideas and plans.