The Penny Game IS Changing:
The stock promotions and pumps are slowly dying, if they are not already dead. Thus, the game is changing.
How many have been burned by these? The answer is more than you can even count... People are getting burned left and right.. and not just the traders, but also the CEOs (ones that don’t hire a promoter so they can dilute into the volume)!
These promoters get paid, let’s just say $10 - $40k for example, they then send out a newsletter after market close for the next day. The DD they write up is something written in 5 quick minutes. These people have no clue what they are promoting, nor do they push it. They simply send a newsletter and pocket the cash (or sell the shares they were compensated with). They got paid and business is business as far as they are concerned!
What happens next? The stock gets pumped full of hype, people put their buy orders in way over the current offer right away so that when the market opens the next day it causes the stock to gap up. When a stock gaps up like that it will, most likely, run a little before falling - or it will just plain fall. IF the company hired the promoter to bring in volume so they can dilute, they’ll start selling right away. Those diluting do not care about PPS, all they need is volume so they can unload. Also, all those who are already in (in addition to front loaders if they are any) will sell the gap up. Red end of day or the next day and you’re left holding a bag trying to figure out what just happened.
What about the big promotions? A few do well and gains are very nice. They are most likely front-loaded. They may run up 1000% but once they top they get diluted back down that 1000% and sometimes more. The only people looking for a $200k-$2mil promo are the people who have front-loaded the stock along with those sending out the alerts. Most will miss the entry, miss the exit, and get caught holding. Most rumors about a big promo have a budget that is exaggerated to help the hype of it. Most rumors of stocks and promotions are rumors of a rumor, before a contract or anything has been made official... Why is every stock going to go "next week?"
Pumps are front-loaded 99%+ of the time by someone or some people – not necessarily all those pumping it. That doesn’t mean that it will not be effective though. A stock that gains momentum will continue to run on its own, granted the momentum is not killed by people whacking out and under-cutting the top offer. Volume must be there as well.
Also, not every Ihub poster is trying to spread word of a stock to dump their shares. Some are just trying to tell others they have found a good one.. they are bringing it awareness. Posting (DD, charts, good information, etc) and pumping (To the moon!) are different. People are paid to pump and the same goes for bashing. Most do those without getting paid, though; paid pumping is becoming more and more common.
Note that there is a difference between awareness and promotions, and that not every pump or newsletter is compensated. If it's compensated then it must be properly disclosed. Promoters may choose to give a stock pick of their own that they are not compensated for. Who doesn’t have their own picks?
What now? Well the answer to that is obvious is it not? These promotions and pumps are bringing in less volume and are much less effective than they used to be in the past. More and more people are completely ignoring them as the days go on. In due time traders will no longer (quite a few are already there) play the pumps or what some compensated newsletter gives them for fear of being burned again.
Bottom line: Credibility is being lost everywhere.
Where is the game headed next? It is headed in the opposite direction of pumps, promotions, and pos companies.
One topic I hear the most about is how people just want a solid play that is not pumped/promoted. People want; a company that is real, one with good DD, one with good management that gets things done - moving the company forward, a chart that looks promising or could be promising, one we can hold for a week or two or a month or two without stressing it, one that is not being diluted & r/s’d, etc you know the drill.
Isn’t that something you would like too?
Many want a quick buck, understandable at times, and get burned hopping in and out of anything that may do ok. Take things one day at a time, stay consistent, and buy into the solid stocks that you feel comfortable holding. Know what you own. Consistency is one of the keys to surviving the markets.
An extra thought: Do Person Marks really matter? If someone has a ton of person-marks does that make them a hands down better trader? No. You can pump the active boards and get person marks. There is even a Person-Mark Exchange Board...
However, if someone you see does deserve one and you feel they earned it, feel free to give them a mark.
Thank you for taking the time to read this post. In no way, shape, or form and I putting people on the throne or throwing people under the bus here. These are just some thoughts - that many are thinking as well.
Thank you,
-MGMT
All posts are my opinion no matter how they are worded or come across.
