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Author: tim443 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 63935  
Subject: Penny stocks }}:-( Date: 3/13/2007 7:36 AM
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Since I've received several comments on what some disparage as "penny stocks" which is defined as.... well... it depends. Anything from under 10¢ to under $10. I've decided to show an example of a high priced stock that shows how much safer they are.

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=new&sid=0&o_symb=new&freq=1&time=9

}}:-(

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Author: rev2217 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 52821 of 63935
Subject: Re: Penny stocks }}:-( Date: 3/13/2007 1:00 PM
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Tim,

Since I've received several comments on what some disparage as "penny stocks" which is defined as.... well... it depends. Anything from under 10¢ to under $10. I've decided to show an example of a high priced stock that shows how much safer they are.

Here at The Motley Fool, we generally understand the term "penny stocks" to mean any stock that has a price less than $5.00 per share. As your post points out, the upper limit is somewhat fuzzy but $5.00 is about as good of a threshold as any. Basically, stocks in this range tend to be very risky because the companies are in trouble, or at least perceived to be in trouble -- which is why "nobody" wants their stocks. In most cases, these stocks have fallen from ten, twenty, or even fifty times their current price. In many cases, the companies are in or headed for bankruptcy.

It is possible to find a true gems among the penny stocks, and the payoff for doing so can be huge, but you really have to do your homework very thoroughly. The gems tend to be (1) companies for which perceived circumstances have set off major unfounded panic among investors, (2) small companies that are still in a start-up phase and either not quite profitable or just barely profitable, but with growing sales and profitability, and (3) companies that are too small to gain notice from the larger investment community but nonetheless growing. Nonetheless, I agree strongly with the position taken by The Motley
Fool
-- if you want to play with penny stocks, do so with your gambling money rather than with your investing moeny.

Norm.


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Author: fishincanuck One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 52822 of 63935
Subject: Re: Penny stocks }}:-( Date: 3/13/2007 1:04 PM
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Hiya Tim

The link doesn't work, believe the symbol has changed to newc.pk

Heather

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Author: johnburro Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 52823 of 63935
Subject: Re: Penny stocks }}:-( Date: 3/13/2007 1:37 PM
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There are rules about margining stocks. Penny stocks are all those not eligible for margining or margined at reduced rates. Cut off is $5. Also represents a threshold for many mutual funds.

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Author: tim443 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 52825 of 63935
Subject: Re: Penny stocks }}:-( Date: 3/13/2007 1:49 PM
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Basically, stocks in this range tend to be very risky because the companies are in trouble, or at least perceived to be in trouble -- which is why "nobody" wants their stocks. In most cases, these stocks have fallen from ten, twenty, or even fifty times their current price. In many cases, the companies are in or headed for bankruptcy.


Norm,

While that may be true on the US markets, many stocks on the venture, or even on the TSX started out at very low price per share and often remain "penny stocks" for years until they no longer are.

I give you as examples (both of which I have owned for awhile):

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=CA%3Apdn&sid=0&o_symb=CA%3Apdn&freq=2&time=20&x=52&y=15

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=CA%3Auex&sid=0&o_symb=CA%3Auex&freq=2&time=20&x=52&y=20

This one I don't own:

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=CA%3Amar&sid=0&o_symb=CA%3Amar&freq=2&time=20&x=49&y=21

I've always felt that taking knowledge from one situation and transposing it to a completely different situation without thought is not always ... uh can't come up with a polite word. ;-)

Tim

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Author: tim443 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 52827 of 63935
Subject: Re: Penny stocks }}:-( Date: 3/13/2007 2:01 PM
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Hiya Tim

The link doesn't work, believe the symbol has changed to newc.pk

Heather


Heather,

Would you believe that has happened during the time I took my cat to the vet an hour ago. }}:-(

Norm,

Meant to mention that someone (with a TMF on the front of their handle) called one of my US$10 stocks a "penny stock" recently. }}:-(

Now this is a penny stock (which I own and trade constantly): }}:-(

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=vrde&sid=0&o_symb=vrde&freq=2&time=12

I recently sold it at 6.2¢ and bought it back at around 4¢.

Tim

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Author: sahfee Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 52829 of 63935
Subject: Re: Penny stocks }}:-( Date: 3/13/2007 2:31 PM
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At IB they do not give margin on Venture stocks. At Questrade here is the stock price versus margin setup

SHARE PRICE
MARGIN REQUIREMENTS
• Reduced Margin Eligible Securities 30% of the market value
• Securities selling at $2.00 or more 50% of the market value
• Securities selling at $1.75 to $1.99 60% of the market value
• Securities selling at $1.50 to $1.74 80% of the market value
• Less than $1.50 100%


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Author: rev2217 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 52832 of 63935
Subject: Re: Penny stocks }}:-( Date: 3/13/2007 4:33 PM
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Tim,

While that may be true on the US markets, many stocks on the venture, or even on the TSX started out at very low price per share and often remain "penny stocks" for years until they no longer are.

Yes, that happens here, too. OTOH, many of those start-ups also go nowhere or, worse yet, fizzle and go out of business long before they get out of penny stock range.

I give you as examples (both of which I have owned for awhile):...

I also made a few acqisitions that were in this category here in the States, but only after "doing my homework" and then only with spare cash. In fact, I still own both of the companies.

>> I bought about ten shares of Be Free, Inc. (formerly NASDAQ: BFRE) back around 2000, when it was around $20 per share, then increased the position to a couple hundred shares after the market crashed in the wake of the "9/11" attack for about $1.50 to $1.60 per share. After the company merged into ValueClick, I acquired another couple hundred shares or so for $2.50 or so per share. So now I have a few hundred shares of a company that's trading around $27 per share.

>> I bought a couple thousand shares of Pioneer Railcorp (pink sheets: PRRR) for about $1.50 when I saw that it had a PE ratio of about five (!) and no serious debt problem back around 2002. It has since risen to about $3.75 per share in spite of being delisted and taken private in a transaction in which the company bought out all positions smaller than 2,000 shares.

But both of these were unique situations in which I was familiar with both the company and the industry. I would not recommend such investment to most of the audience here at The Motley Fool.

Norm.


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Author: tim443 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 52836 of 63935
Subject: Re: Penny stocks }}:-( Date: 3/13/2007 7:57 PM
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But both of these were unique situations in which I was familiar with both the company and the industry. I would not recommend such investment to most of the audience here at The Motley Fool.

Norm.



Norm,

We all have different needs from the market. While I present "interesting" stocks to people I don't recommend, nor do I judge people's abilities.

My own situation is that I have a nice (paid for) condo, no debt, few expenses, an adequate pension, wealthy grown up kids and I use my investment capital gains to provide such extras as travel and fun. Perhaps this clouds my judgement on risk but it is my nickle and my finger on the button.

Obviously "high risk" stocks get less financial commitment.

Tim

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Author: fakena Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 52839 of 63935
Subject: Re: Penny stocks }}:-( Date: 3/13/2007 10:05 PM
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While that may be true on the US markets, many stocks on the venture, or even on the TSX started out at very low price per share and often remain "penny stocks" for years until they no longer are.



Exactly, and not all are startups with an almost zero chance of surviving but promising to shoot the lights out anyway. And the really good thing is that most mutual funds don't add to buy side demand for many years after a period of excellence in operating performance. And when the point comes that they do become involved there's a big ooomph to the upward trend. On the other side of that equation, I'd be wary of purchasing a micro that seems to get mentioned often on something like BNN.

It's wouldn't surprise me if 80% of my gains came from microcaps trading at less than $5 and most likely from the Venture exchange. Stocks under $10 its probably closer to 95% maybe.

Defintely an excellent source of looking for stocks with an awesome looking PEG or TRR. Then again its also the source for a lot of companies with no chance of survival and promising to shoot out the lights.

The market price per share or exchange traded on matter very little in final buy/hold/sell decisions. but personally my best sources of buy candidates are either on the venture, and if not; trading on a so-called major exchange at a very low volume.

In my experience the Venture has been an excellent source of good little companies available for an unbelievable price.

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Author: rev2217 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 52848 of 63935
Subject: Re: Penny stocks }}:-( Date: 3/14/2007 11:13 AM
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Tim,

My own situation is that I have a nice (paid for) condo, no debt, few expenses, an adequate pension, wealthy grown up kids and I use my investment capital gains to provide such extras as travel and fun. Perhaps this clouds my judgement on risk but it is my nickle and my finger on the button.

I like your situation! :-)

I'm not trying to tell you what to do or what not to do, but rather trying to warn novices who might read this threat about potential risk. I intended my comments about "penny stocks" in previous replies to your posts here to echo the established policy of The Motley Fool in this regard. I'm sorry if that thrust was not obvious from my comments.

In any case, I have to agree with the position of The Motley Fool regarding the inappropriateness of "penny stocks" for neophytes. Those who don't know what they are doing need to stay away.

Obviously "high risk" stocks get less financial commitment.

Yes, as they should!

Norm.


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Author: tim443 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 52849 of 63935
Subject: Re: Penny stocks }}:-( Date: 3/14/2007 12:56 PM
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I intended my comments about "penny stocks" in previous replies to your posts here to echo the established policy of The Motley Fool in this regard. I'm sorry if that thrust was not obvious from my comments.

In any case, I have to agree with the position of The Motley Fool regarding the inappropriateness of "penny stocks" for neophytes. Those who don't know what they are doing need to stay away.


Norm,

Motley Fool is a very UScentric bunch. Much of what they (somewhat imperialistically) preach is I'm sure pertinent to neophyte US investors. Having said that, they have totally missed the commodities boom and were touting tech stocks to the moon in 2001.

We have built a nice little Canadian niche here that tries to remedy some of their worst omissions. You are welcome to participate but I have no interest in carrying on this discussion ad infinitum.

JMNSHO

Tim

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Author: darkblue2007 One star, 50 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 63035 of 63935
Subject: Re: Penny stocks }}:-( Date: 9/25/2012 9:36 PM
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Tim,

Do you still own APDN?It is rocking now. Any chance that FOOL adds APDN on scorecard

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Author: tim443 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 63036 of 63935
Subject: Re: Penny stocks }}:-( Date: 9/25/2012 10:18 PM
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Do you still own APDN?It is rocking now. Any chance that FOOL adds APDN on scorecard

darkblue

I've never heard of APDN?

http://www.google.ca/finance?q=apdn&ei=wzRiUNCyHoGoqgGkN...

As to "scorecard" I'm assuming you must be talking about CAPS... I don't use it as they wouldn't allow Canuck stocks in.

Tim

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Author: tim443 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 63037 of 63935
Subject: Re: Penny stocks }}:-( Date: 9/25/2012 10:27 PM
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Good grief, I just realized you replied to a five year old thread. }};-()

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