Churak, I agree with all you have said. I had just posted the same comment about 'patience' to Lifegear (another shell stock afficionado) on my other board.
It's true that if you decide to follow the shell stock approach to the penny market, you must forgo most of the excitement of momentum. But given the terrible losses that can occur very quickly with some of the toxic waste passed off as momentum plays, patience is looking better all the time. But I agree, that people need to evaluate themselves and their investing personality. For that reason, from now on I will refer to a shell strategy as "taking a position" in a stock rather than "playing" a stock, as there is very little play involved.
Personally, I know that part of me is a simple minded mammal which likes to chase shiny, moving objects. So I reserve a small amount of play money for momentum plays. But these days I am skewing more and more of my portfolio into shell stock positions. We'll see how it turns out.
I agree that there are some very knowledgeable and generous people on this board. As is often the case in many fields, sometimes the most successful are also the most patient and willing to share their insights. It is one of these who taught me about 'scalping'. Another taught me about reading the filings, and the merger news which results in plays like PLTT and LFZA.
Agree about alot of chart analysis not always being applicable to POS pennies, although chart basics like resistance, support and trend lines, as well as RSI can be useful. In addition, I find indicators like accumulation/distribution and CMF to be reliable confirmations of company dilution visible on the level 2s. But I wish I had $100 for everytime I bought a stock because a "golden cross" was imminent, only to have that stock immediately tank the next day..lol!
I agree that each must perform their own due dilligence, but for many starting out, due dilligence seems to consist of visiting the company website, and analyzing the company PRs. On the other hand, classic Big Board analysis, like calculating PE ratios and industry metrics, barely applies to most penny stocks, either.
I was thinking about it last night, I decided cynically that basic due dilligence for most pink sheets and pennies might consist of the following:
1) Does the company have a working phone number?
2) Does the company have a verifiable address one could visit?
3) Is the company listed in any state documents and businness records, or just a figment of the CEO's furtive imagination?
4) What is the outstanding share count, and assigned share count? (If the stock in question is a Nevada based pink, the AS is almost more important, as that could become the OS overnight..lol)
5) Is the transfer agent gagged?
6) Does the company have toxic convertibles and other evidence of terminal debt?
7) Does the company have a history of dilution and reverse splits?
8) Does the CEO have a prison record and a rap sheet?
9) Are there any signs the stock could be imminently halted by the SEC?
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If you take anything I say as advice, you're crazier than I am.
