Somebody over on Yah00, posted this about how to invest in pennys. I think it makes a lot of sense. I know there are many ways to invest, however, this to me sound safe for investor who lack experience. From dowexpert: Not my opinion and make no suggestion on trying this.
In my estimation, very few Penny Stocks are worth holding long; however, due to the business model, forecasted revenues, and exceeding targets by 70% of late, I strongly believe **** is one to own through at least 2012. Nevertheless, when buying such a risky stock, it is always my plan to hold long with shares in which I have created a zero cost basis.
When you believe a stock is going to get a quick pop due to hype,news, etc..., it is important to buy in early (for example, I bought 155,000 shares of **** at .031 avg.). My strategy is to sell off half my position at double cost ie: .063, thus creating a zero cost basis in my remaining shares. If the company goes belly up, I lose nothing. If (in this case) they achieve their objectives through 2012, I may see a return of astounding proportions.
The advantage to this strategy is two fold: 1) I recover 100% of my original cost, selling only half my position, and 2) I hold the remainder long with no risk when I see potential for larger return.
Many people sell off 100% of their position when the stock pops, and then buy back in if it goes down. I never blame anyone for booking profits, because if that is their strategy, they still made solid return. However, many of these same traders will chase the stock price on the way back up, wishing they had not sold out 100% of their original low cost position.
With most Penny Stocks, I book my profits and never look at them again because hype popped the stock, not a solid business reason. In ****'s case, it is quite different. This little company has a forecast which could potentially build a $55 million dollar revenue stream by 2012. All things point to them exceeding their objectives. Additionally what they do is unique, exciting, and proprietary. There is tremendous potential for future acquisition or even royalty income from patents.
I graduated from a top ten University in 1984 with a degree in Advertising. I also have another degree. For 29 years I have been in the field, and have rarely seen such a fine concept, business model and plan for niche targeting through cable systems. My personal belief is that **** will either be acquired prior to 2012, or will be trading on the Nasdaq, with revenues exceeding $55M by 2012. As a result, I see long potential that far outweighs making a quick $3,000-$5,000 gain on my position. Because of my strategy; however, my risk has been eliminated from the equation.
The good thing so far is that I actually sold 77,500 shares (half my position) at .07, which netted me a nice profit above my entire avg cost of the original, entire $155,000 shares. So, even though my strategy was to just hold 77,500 shares long, with a zero cost basis, I actually made a small profit on top of my goal.
So, what do I do now? I quit looking at **** and pretend I don't even own the 77,500 shares of free **** stock. I believe my 77,500 shares will pay back in the neighborhood of $150K-$250K by 2012. My prediction is conservative. I do not think we will ever see ADSY at .01 again. In the unlikely event we do, I only gave up a few thousand dollar gain in the short term for a potential lottery winner, and either way, made money.However, if you booked your profits, I don't blame you for taking money off the table. I see my 77,500 shares of **** as seeds to a much bigger money tree.
