# Beat penny stock scams?



## MattyK (18 April 2014)

Hi, I have read a lot about penny stocks and pump and dump scams. But I have a question, is it a viable strategy to get in early on a pump and dump scam and "ride it" until you make a profit and sell. I don't see it being illegal as you are not the one promoting it, just investing in it. 

Thank you.


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## skyQuake (18 April 2014)

MattyK said:


> Hi, I have read a lot about penny stocks and pump and dump scams. But I have a question, is it a viable strategy to get in early on a pump and dump scam and "ride it" until you make a profit and sell. I don't see it being illegal as you are not the one promoting it, just investing in it.
> 
> Thank you.




Sure, if you can identify it before the PUMP stage. 

But generally it gets emailed to everyone right before the dump stage so there's no upside left.


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## burglar (18 April 2014)

MattyK said:


> Hi, I have read a lot about penny stocks and pump and dump scams. But I have a question, is it a viable strategy to get in early on a pump and dump scam and "ride it" until you make a profit and sell. I don't see it being illegal as you are not the one promoting it, just investing in it.
> 
> Thank you.




It's not investing, ... it's gambling!

As far as I know the only reasonable way to be in on a P&D is to own the stock first.
Then one day you see it burst into action.
You agonise for a day or so, ... knowing most P&D's come to an abrupt end.

It is great for the adrenaline, but not so hot for the bank balance.


If you are young, get rich slowly.



> compound interest (is) the most powerful force in the universe



.


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## AverageJoe (13 September 2014)

If you are looking for that adrenalin rush aka gambling, why not trade the major news in Forex? You either make or lose lots of $$ in seconds. Every so often a Penny stock will turn to that multi bager that you read in the media and it is that dream that keeps sucking punters into this sector.


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## Money4jam (14 September 2014)

AverageJoe said:


> If you are looking for that adrenalin rush aka gambling, why not trade the major news in Forex? You either make or lose lots of $$ in seconds. Every so often a Penny stock will turn to that multi bager that you read in the media and it is that dream that keeps sucking punters into this sector.




I think penny's keep the dream alive.  If you do the research at least there is a chance of decent payday.  I personally invest only very small amounts on penny's but like to feel I have at least something in the game.  The quality of the directors is another major consideration for me.


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## burglar (14 September 2014)

Money4jam said:


> I think penny's keep the dream alive.  If you do the research at least there is a chance of decent payday.  I personally invest only very small amounts on penny's but like to feel I have at least something in the game.  The quality of the directors is another major consideration for me.




I see it all the time, "quality of the directors"
Mere mortals like me, cannot hope to know anything about that.
We can read/research such matters.

Truth is some of they lie about themselves, 
each other and the state of the books/company.

It's a lottery.

Disclosure: I hold a lot_o'_lottery tickets!


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## DeepState (14 September 2014)

burglar said:


> I see it all the time, "quality of the directors"
> Mere mortals like me, cannot hope to know anything about that.
> We can read/research such matters.
> 
> ...




If you take the time to do the work, you will find directors clump together into little clubs.  Those little clubs produce investment returns.  Some clubs are high quality and tend to produce better returns.  Some are rubbish.  This has been seen to persist...that is, it has predictive value.  There is a move on in the corporate governance arena to rank these people.  The data has already been compiled.

Watch their feet. Quality is defined as those who create value for shareholders. Check who's company they keep.  You can do it if you want.  It's well within your reach.


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## burglar (14 September 2014)

DeepState said:


> ... Check who's company they keep ...




Ha Ha


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## Money4jam (15 September 2014)

DeepState said:


> If you take the time to do the work, you will find directors clump together into little clubs.  Those little clubs produce investment returns.  Some clubs are high quality and tend to produce better returns.  Some are rubbish.  This has been seen to persist...that is, it has predictive value.  There is a move on in the corporate governance arena to rank these people.  The data has already been compiled.
> 
> Watch their feet. Quality is defined as those who create value for shareholders. Check who's company they keep.  You can do it if you want.  It's well within your reach.




I agree completely that quality is defined by the value that the board creates for shareholders.  We investors are generally mercenary by nature and driven only by greed. (no offense to the few that don't fit this description). 

When I say quality of the directors I am not talking about how nice they are to stray puppies.  I only want a track record of delivering success to the business's they have helped to guide.  This can be researched to some degree.


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## avion (15 September 2014)

Not sure if those can be shorted (the dump side...) in Oz but that's how Tim Sykes made his cash in US. I guess it's easier to find'em that way... Not something i do, futures are easier to go short with...


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## pixel (15 September 2014)

avion said:


> Not sure if those can be shorted (the dump side...) in Oz but that's how Tim Sykes made his cash in US. I guess it's easier to find'em that way... Not something i do, futures are easier to go short with...




I don't know of any Australian penny stocks that can legally be short-sold. Pump&Dump, in this market sector, requires the Pump to come first; once you hold a position, you can Dump them.
Wash, rinse, and repeat. Or, as the Scotsman said: "Let 'em swing."


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## DeepState (15 September 2014)

Money4jam said:


> I agree completely that quality is defined by the value that the board creates for shareholders.  We investors are generally mercenary by nature and driven only by greed. (no offense to the few that don't fit this description).
> 
> When I say quality of the directors I am not talking about how nice they are to stray puppies.  I only want a track record of delivering success to the business's they have helped to guide.  This can be researched to some degree.




M4J, it's good you are interested in this.  It is real.  

There are more measures that have been shown to be useful in assessing the quality of governance.  These have been shown to be predictive as well.  One that I enjoyed:  If a CEO makes an outsized house purchase, it is a sign that power has gone to his head and is thus a sell signal.  Hedge fund managers would scour various databases regularly for information about purchases linked to various CEOs.  As the value of improvements were not so readily available, some would send up ultra-lites to check for the nature of the buildings themselves (before the days of Satellite view for Google Maps).  Another version of 'if the company installs a fountain in the foyer, sell it", I guess.  Except the fountain has moved into the CEO's abode in a more egregious transfer of wealth.


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## DeepState (15 September 2014)

pixel said:


> I don't know of any Australian penny stocks that can legally be short-sold.




Hi Pixel

I am not aware that there was a restriction.  Are you referring more to the fact that borrow is hard to source rather than that this may be due to some regulatory restriction?

Shorting penny stocks is systematically profitable (lottery effect is a key reason, but there are more - some associated with the difficulty of obtaining stock borrow and or lack of permission to short sell for mandate specific reasons where intermediation by a fund manger is a feature).  However, that's before allowance for borrowing costs which are likely to be elevated.


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## burglar (15 September 2014)

Many a P&D pivoted today!


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## tech/a (15 September 2014)

Due to the fall in the AUD

Some opportunity about.


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## pixel (15 September 2014)

DeepState said:


> Hi Pixel
> 
> I am not aware that there was a restriction.  Are you referring more to the fact that borrow is hard to source rather than that this may be due to some regulatory restriction?
> 
> Shorting penny stocks is systematically profitable (lottery effect is a key reason, but there are more - some associated with the difficulty of obtaining stock borrow and or lack of permission to short sell for mandate specific reasons where intermediation by a fund manger is a feature).  However, that's before allowance for borrowing costs which are likely to be elevated.




List of officially shortable stocks: http://www.asx.com.au/data/shortsell.txt

Seems I haven't been looking at this list for some time. It does contain more penny stocks than I thought.
Time to brush up and check the list of my penny stocks against the shorted totals :frown:


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## burglar (15 September 2014)

tech/a said:


> Due to the fall in the AUD
> 
> Some opportunity about.




I have made some hasty sales of late.
Put a fews shekels in the war chest.

Hope I don't miss train.


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## DeepState (15 September 2014)

pixel said:


> List of officially shortable stocks: http://www.asx.com.au/data/shortsell.txt
> 
> Seems I haven't been looking at this list for some time. It does contain more penny stocks than I thought.
> Time to brush up and check the list of my penny stocks against the shorted totals :frown:




Just FYI, this list contains all reportable short sold positions as at report date.  It is not the list of shortable stocks, because all stocks are capable of being shorted if you can secure borrow. In the past, it was a tolerated practice that borrow wasn't even required to short sell (ie. uncovered short).  This has been the subject of a crackdown in recent years.

Also FYI, the proportion of outstanding shorts and changes in outstanding shorts are indications of smart money in action.  It is predictive in broad terms.


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## RegularGains (27 September 2014)

avion said:


> Not sure if those can be shorted (the dump side...) in Oz but that's how Tim Sykes made his cash in US. I guess it's easier to find'em that way... Not something i do, futures are easier to go short with...




I want to download Tim's videos from a torrent site, learn the system and give it a go with US penny stocks. From what I heard his alert system isn't very useful as its hard to find inventory to short and the longs have already taken off by the time you log in to buy them. Can anyone comment?


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## Davehk (2 August 2017)

RegularGains said:


> I want to download Tim's videos from a torrent site, learn the system and give it a go with US penny stocks. From what I heard his alert system isn't very useful as its hard to find inventory to short and the longs have already taken off by the time you log in to buy them. Can anyone comment?






broooo. Would you mind share Tim's video with me ? i came arcoss him on youtube, and interested into penny stock. much appreciated thanks man!


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## MrChow (7 August 2017)

The other well known stock forum exists for penny stocks.

There are stocks that 10 bag on $0 revenue and for the next year they attract people who bought the bubble and post everyday why they'll make money and why everyone else's view is just sabotage.  Then the financials never come and they blame management and eventually disappear.

The ones who do the pumping usually organise something behind the scenes and leave before the hype reaches it's peak.  The ones that are left usually are too invested to see that the same pattern always happens as they always fall for a get rich quick / next big thing narrative:

IOT, RAP, NOR, BRN, PSY, ZIP, TON, SYR, OBJ, ADO, BUD, EPT, CL8, RNT, ESI, SAS, XPE, YPB.

I have yet to see a no-revenue company that's popular there actually make a profit.


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## Gringotts Bank (7 August 2017)

And then it's like... [you know the quote]


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## Gringotts Bank (7 August 2017)

Did you know Mr Chow studied medicine before getting into acting?


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## MrChow (9 August 2017)

Toodaloo RAP.

Pumped from $10m to $200m marketcap on $0 revenue.

Dumped -78% today as the product doesn't work.


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## eNyce (17 August 2017)

RegularGains said:


> I want to download Tim's videos from a torrent site, learn the system and give it a go with US penny stocks. From what I heard his alert system isn't very useful as its hard to find inventory to short and the longs have already taken off by the time you log in to buy them. Can anyone comment?



Could you please share the link when you find it?


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