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Wednesday, July 04, 2007 6:00:02 PM
Here's a lesson in Stock Trading 101: It's not enough to know that a stock is moving; you have to know WHY it's moving.
There are hundreds of gold story stocks out there competing for investor attention. Why is Raven so hot? Why did it trade 12 million in a single day? The answer is simple: promotion. It has nothing to do with gold. It could have been oil sands, chinese solar, russian oil or any number of other themes. I've been trading otc stocks for ten years and have seen too many of these deals to count. This type of promotion ends very badly. The only question is how far it has left to go. You could see 2, maybe even 3, but that would just be a golden opportunity to short more. This stock will be 25c within six months.
So, yes, the fundamentals do matter. Feel free to ignore them at your peril. When they are done with it, when the momentum is gone, you better hope that you're not still in it because it will be VERY difficult to sell. A word to the wise. Put your offer in well below the market price. Market makers in the otc market are not required to honor their bids/offers and will pull the rug on you when everyone is panicking.
"The things that will destroy America are prosperity at any price, peace at any price, safety first instead of duty first, the love of soft living and the get rich quick theory of life."
--Theodore Roosevelt
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