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Post# of 137481
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Profe$$or

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Profe$$or

Re: None

Sunday, 11/25/2007 12:16:10 AM

Sunday, November 25, 2007 12:16:10 AM

Post# of 137481
Why is it that so many new traders like to play the "subbies" or the triple zero penny stocks? I think it may be because of the "potential" of these stocks. It is the equivalent of buying packages of baseball cards or Magic cards. Why is such a premium placed on an unopened pack of cards when all of the cards may be somewhat common or worth next to nothing? Because it is the potential of opening the pack and finding that ultra-rare card that is worth quite a bit of money. I think that penny stocks or pink sheet stocks have this same allure. There is a term that is used frequently on Ihub now and that term is "kool-aid" When everyone starts getting high on a particular stock and it seems too good to be true; in most cases it is.

We used to use a different term that meant the same thing and that term was "tulips". I think I may bring the term back here on campus. The term comes from the tulip bulbs whose prices created the famous market bubble of eighteenth-century Holland. The reason they were so valuable was that in bulb form, no one could tell whether the flowers would be plain old boring tulips or unique variegated tulips of rare and irreproducible beauty. The potential for a bulb to produce a one of a kind flower was enough to send its price into the stratosphere. Only when the plant bloomed would the true value of the bulb be known. Sound familiar?

We'll want to try our best to avoid the "tulip plays" that exist out there. While latching onto an honest to gosh runner can infuse the portfolio rather quickly; it can do just the opposite more times than not. We've been doing very well with the chart setups we've been playiing and that is what we need to continue to do. Remembering that it is a marathon and not a sprint. So when you read posters giving advice not to "drink the kool-aid" you may want to take those words to heart. Avoid the "tulips" and stick to your charts.

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