When do you determine when to buy a stock?
- Thread starter xen88
- Start date
-
- Tags
- when to buy
greggles
I'll be back!
- Joined
- 28 July 2004
- Posts
- 4,460
- Reactions
- 4,494
There's an interesting thread on that topic here: https://www.aussiestockforums.com/threads/when-to-buy-a-stock.34853/
- Joined
- 2 February 2006
- Posts
- 14,009
- Reactions
- 2,891
Thoughts on penny stocks and in most cases micro-caps: In micro-cap companies you may well find the director's number one important aim is to have enough cash in the company to pay their wages. Award themselves free shares, options and warrants and await an opportunity to sell at a big profit. Whilst at the same time being experts at raising cash by selling new shares at lower and lower prices. Many may well be genuine and trying very hard but the outcome is so often the same. Many micro-caps were once small caps, mid-caps and in a very few cases once in the top 200 companies.
So make sure the penny stocks have loads of cash and preferably a good income from somewhere - hardly any have. Check what it costs the company to run each year including wages. Some might have a market cap of $5 million with only $500,000 in the bank and running costs at $800,000 per annum and little income - lots of mining explorers are in this position. What loans do they have and at what interest rate, especially short term loans.
Watch out for options and warrants that may be all but hidden that directors and others obtained as green seed capital. I have two of these myself and one director is reported to have said,"keep quiet about these". One I got 10 shares for the price of one and the directors 20 shares.
Many of these companies are uninvestable. A few might turnout so cheap it's unbelievable. Felix Resources was the equivalent of 35c in 2003 and peaked at $23.30 in 2008 in the coal boom. However UXA Resources was 51c in 2009 and now not worth a groat.
Only invest in this sector what you can afford to lose on a racing bet. Or as stupid as me in the past and very occasionally today as well.
So make sure the penny stocks have loads of cash and preferably a good income from somewhere - hardly any have. Check what it costs the company to run each year including wages. Some might have a market cap of $5 million with only $500,000 in the bank and running costs at $800,000 per annum and little income - lots of mining explorers are in this position. What loans do they have and at what interest rate, especially short term loans.
Watch out for options and warrants that may be all but hidden that directors and others obtained as green seed capital. I have two of these myself and one director is reported to have said,"keep quiet about these". One I got 10 shares for the price of one and the directors 20 shares.
Many of these companies are uninvestable. A few might turnout so cheap it's unbelievable. Felix Resources was the equivalent of 35c in 2003 and peaked at $23.30 in 2008 in the coal boom. However UXA Resources was 51c in 2009 and now not worth a groat.
Only invest in this sector what you can afford to lose on a racing bet. Or as stupid as me in the past and very occasionally today as well.
- Joined
- 10 May 2016
- Posts
- 43
- Reactions
- 18
there are several ways you can approach this, for penny stocks, yes, the potential profit can be huge, they usually arent paying dividends so all you have is the chance for capital gain, but without looking at all sorts of info about the stock's health, as a business, you could be really gambling, so - dont buy too many of them as its possible you could lose it all, dont think of buying stocks, think of owning businesses, so - if you decide business quality is most important to you then track the good businesses and wait for moments in time when they are priced cheaply, relative to their true worth, then you increase both your chances of making a capital gain and your chances of reliable dividend income along the way
