TheRumpledOne
6,411 posts
msg #59790
- Ignore TheRumpledOne |
2/19/2008 1:18:18 PM
In today's inbox:
Dear avery,
I just read an article in Sports Illustrated about a boxer
that beat someone that was a foot taller and ninety pounds
heavier.
So size does matter but sometimes it's the little guy that
can be dangerous.
The same is true in the stock market.
I've lost more money in stocks under five dollars than any
other stock.
It's the cheap stocks and the penny stocks that prey on our
biggest vulnerabilities.
You can buy a lot at a very good price and the upside is
huge.
Just think about it...
Ten thousand dollars can buy you one hundred shares of a
one hundred dollar stock or ten thousand shares of a stock
at a dollar.
If the hundred dollar stock moves up a point, you make one
hundred dollars but if the one dollar stock moves up the
same amount, you make ten thousand dollars.
So we succumb to our "get rich quick" desire and go for the
cheaper one.
Let me tell you right now that is the wrong decision.
In most cases, price can be associated with quality.
A stock is valued at a hundred dollars because it has real
value and earns real money.
A one dollar stock is a speculative play and in most cases,
they don't ever make it much higher.
People take large positions because they can and end up in
over their heads.
When a ten thousand share position goes down eighty cents,
you will lose eight thousand which is probably a lot more
than you ever intended to risk.
Look at Revlon.
The stock dropped from five to three.
At this point there had to be great upside, right?
Wrong.
Ten thousand shares of Revlon would have cost you twenty
thousand in losses because it hit a low of seventy six
cents.
The point is to keep your guard up.
Don't fall for the allure of the quick buck.
If you want to get involved in a cheap stock, do your
homework.
Even then, be prepared to risk whatever you are investing
and then do so with the understanding that you are
speculating not investing.
You are hoping that the stock will go up.
Invest with an amount that you will be happy if it does
work out and fine if it doesn't.
Beware of the little guy.
Your Coach,
Adam Mesh
P.S. This is for everyone who writes or calls in to ask my
opinion about penny stocks!
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rterbush
4 posts
msg #59800
- Ignore rterbush
modified |
2/19/2008 9:24:58 PM
TRO, (and others)
I'm new to SF and thus these discussions and am also reaching a new level of commitment to finding success as a day trader. (read: "I am a noob")
That said, I was immediately surprised to see that many of the filters that you and others are sharing are actually restricting filter results to stocks below $15. This goes against everything I have learned thus far and am curious if I have been learning from the wrong sources.
I am sure there are plenty of opinions on the subject but am curious if you agree with the email you shared above or are offering it as a conversation starter.
Thanks for sharing
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luc1grunt
622 posts
msg #59802
- Ignore luc1grunt |
2/19/2008 9:46:58 PM
rt, you may see "many" filters that look at stocks below $15, but it is very low in proportion to all the posts on this site as well as system examples.
"Below $15" is not taboo. If you know how to trade, you may find some in that range respond well to certain indicators.
Just wanted to clarify. :)
Grunt.
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