FrankSpeech Network Inc (FSBN)

[varok]

Phowell23,

A nice laid out synopsis for one that has been in the game just a few years.


One can win in pennies,but the key is trading not investing..

I generally play mostly big issues,but pennies give greater return in a very short time.

Pennies are the next great movers,but!!

This is my feel on pennies and what one can expect and how to work around this very unpredictable arena..

I wrote this a few years back for my subscribers and many have a wrong impression on what is pennies verses issues with real fundamentals.


In this arcade,98% of the so called participants are way over their heads and have a skewed impression what really comprises what is an investment and what is a crap shoot..From what I have seen in this arcade of penny stocks, it's all in the timing and being able to stay one step ahead of the market markers and the loansharks...There is no such term as long-term,investment,great buy and all the other misnomers that many like to refer to these pennies..For what it's worth, they are all junk and the only money makers are your day traders and the loansharks that feed offshore on what gullible buyers throw their way and the market makers who execute these buy and sells...

When one comes to the pennyarcade,he/she comes with the idea to makes money,but only to be let down..The understanding of how pennies work is in itself an art and science and not the fact that a stock is priced at .01 or .10 or whatever and it should go up because it's so cheap...Most investors if you can call them that in pennies, get the 3rd degree and they lack the sensible approach of admittance that they made a mistake and can't accept their loss..

Since the great tech movement and the market boom as a whole of 2000,everybody with a computor thought that the penny arcade was going to make them wealthly..This has become so far from the truth and 4 years later many have lost thousands and still can't figure it out...

It's simple,98% of all pennies are losers and just plain junk..Many or most companies will have movement beyond a certain entry,but all will without a doubt fall like a rock and flounder at the bottom for years with ever moving north again..If you hear nonsense like "wait until next year",or "put it in your sock drawer" and there are dozens of brilliant ideas only to have you looking back on why did I pay attention to all those clowns on the message boards..

It doesn't matter on how much DD or other research you do on a particular penny stock,because these companies don't have a future..It is the art and science of understanding the way market makers play and until you get a grasp at their non-rules and cheating ways,you will lose..

The idea of holding any company is and should be based on free shares after the principle has been recouped..

First,when a company promotes itself on this exchange,it is for funding their R/D and this is especially true with BIO and Tech companies..Once a company can establish that even their product/idea has legs, it isn't the shareholders that gain,but the owners and the largest preferred shareholders..We as shareholders gain in the cycle of share price movements over a period of time,which allows us to sell on news and reap a decent reward,not hold out in hopes...It is pure nonsense and just doesn't make for an explaination that hold long-term on any penny stock, without exceptions can ever be achieved..

To explain this further..When a company goes public, it is mostly for funding their R&D programs through stock sales by market makers and picked up by us,blah blah,you get the point..Once a company has perfected their technology or product,it will usually in most cases shop around for a buyer for their tech/product or merge as a divison into a larger company or outright hostle type takeover,again this is very true within the Bio companies..Companies with large O/S and huge amount in authorized shares generally don't have a problem with hostile takeover practices.

Through this whole ordeal,the company continues to sell shares until it has ballooned their O/S and depleted their authorized shares so much,they are forced to do the most drastic of all moves,a R/S..All this time they continue saying and moving ahead and convincing us their R/D is on target..But Then,they announce a R/S,because they feel to stay in operation is a must and probably so,since they haven't found a partner and they are short of funds and we are, or some of us reluctantly go along..Posters always use the argument that if the company doesn't split it will go out of business and we will not have anything and should be loyal and stick it out..Loyal!!That's a new one..Now this is just plain incorrect and management knows this and will be able to keep going with or without a R/S..Remember the offshore loansharks? Most companies go for these same culprits and is at this moment diluting the pool as we speak with most pennies..When management and I must say are in general a bunch of sharks that have a printing press for their own benefit and will do eveything to keep the printing of new securities going just to fatten their own greed.Management is up against the wall when they parley their shares and this is always a last attempt and absolutely a death sentence,like the R/S.Incidentally,a R/S approved by shareholders is a formality and will always get approval reguardless how we as shareholders vote..This part is always stacked against us..Of course in certain cases we may be able to thwart a R/S,but that is rare..

In case of any BIO company,they usually disappear into a much larger concern..Healthcare companies that trade on the penny exchange rarely ever become stand alone concerns..The R/D and marketing requirements is far to great for any startup to absorb and is too costly, so they usually and that is if the product is all that is meant to be, will be acquired..In general if a Tech company has a promising product they too will be looking for a buyer,because the tech field is changing so fast that the smaller concerns lack the funding just to stay in the game and will never be able to compete with a much larger firm that have the cash and know how.

Bio companies who have products that can even meet FDA approval will probably be sold or a major PHarma company will become a partner as in a collaboration partner and they absorb or become merger..Now to get to this stage will be with countless rewards towards shareholders equity,but eventually it will become an entity of whomever becomes a partner..This is in most cases the way of a startup Bio company with excellent potential....

You as a shareholder will get the most out of a Bio company on the penny exchange than any other company..The rewards are so great in Bio as well as the tedious long wait and this may require patience that will take years to develop,but eventually if the company has the fountain of youth medicine can make you a wealthly investor,in return on your principle..Also keep in mind, that the risk is also the greatest threat to a dismal demise of your investment dollar.The latter is more accurate than the success rate..

A Bio company that can hopefully get the FDA seal will give the company the real interest and the potential share price explosion within hours of such a PR,but that will only come with the approval..The timeline for a nay or yah on acceptance is rather short on devices than the lengthy clinical trials required for drugs and a device,which not actually being a drug could come sooner then think..So a 6-8 years for even a drug going to trails can certainly be overshadowed with impatience and will keep a stock price from ever achieving the result in the near-term or even pan out all together..The movement on the stock price with these companies comes with the interval press releases which allow you some trading with potential profit.

Market makers control the action on the penny arcade not shareholders..

Is there really manipulation by market markers?

Manipulation by Market Makers is an really an overstated term that carries feelings of exploitation and down right fraud,but in reality,Market Makers are not companies that appear like one night stands and then disappear,quite the contrary..Market Makers are responsible to make a market and to meet the needs of those they are responsible for, companies,shareholders and instituations and it is to these entities where they may try to influence the best market executions.

If the Market Maker was to keep the price steady on the release of news they would find themselves with lots of buys or sells which they had no choice but to fill at the screen price (what you go by)and this is their obligation, but before they could find matching orders (for every buyer has to be a seller and visa versa) they would have to change the price and they would then loose money through market exposure.This is bad for them and for us.

So what happens if there are all sells and the price is going up?Well the explanation is that the Market Maker had an order to fill and no stock to fill it with (this trade would not have shown up on your screen until somewhat later,which are referred to as delayed trades).Under their obligations to create liquidity in the share,the Market Maker is obliged to gather an inventory (Stock holding),but only until they can meet the above obligation.This is only possible if they can encourage people to sell, which can be achieved by raising the price...The order is likely to have been large enough allowing the Market Maker to gather a decent premium on the price.So once the order is filled and the market volume returns to their normal levels, so does the share price.You can see this through the daily highs and lows along with the volume at these particular trades in time or in sequence.

You've heard the term on these message boards all too often "shaking the tree".Well that is when the MMs moving the price up,which will encourages sells, moving it down also encourage sells.Another look is that the price was hiked way up despite the support level and few of the people who got in are now going to sell..The rise was artificial and the real traders in the know just ignored it as it only lasted about 2 hours, but what was caught were investors who were in way before the spike and had forgotten about it, now they want out.Volume is a big part of this and sometimes folks ask "why the volume"..So the Market Makers order gets filled, the price settles back to a support level and volumes decrease and it starts all over again.This scenario is where shorty likes to hang his hat.

The above reason is why you should never put a pennystock in your sockdrawer and daily monitoring is an absolute must.You have heard me post such reasonings and should be
part of every persons understanding and why the term "long" makes no sense and will only have you losing money.

Can you track such activity?So So and there are all sorts of tricks and one is mainly to reduce the volatility..Sometimes this is mostly done by increasing the bid/offer spread therefore discouraging trading especially by day traders and also by marketing the companies shares,Loansharks as referred to equity financing (dilution) in the hope they will take up long term positions.

There are a couple of areas that MMs try to encourage liquidity and one is all to apparent..Notice on the boards when posters beg the company to release news any news,well the MMs need this one venue to increase the liquity and such encourages the companies to produce news releases,whether substantial or not..It does create interest if you know what I mean..The other area is by narrowing the spreads..

You ask if this practice is legal,well sort of and then not.See Market Makers are not supposed to allow themselves to go short,but in the process of making a market they may well find themselves short of a stock.If this happens a Market Maker has a number of options, purchase from another Market Maker,which they do quite often and it is allowed or play with the price in the hope that enough sellers will embark to cover the short or borrow the shares.The institutional borrowing,which happens on larger exchanges is much practiced,but in pennies is unlikely since institutions don't hold pennies unless it is from offshore loansharks and then they just speed up the dilution process to cover and of course a manipulated PR to help in this angle..If that's illegal?Well my friends, this has been going on since the dark ages.

Thus you have your day-traders and their only means is to make money on the heels of the MM's,not your long-term holders,they will never recoup and that I'm sure of.

The key to trading pennies is timing and one must have an understanding of how the market markers play..One rule that will always apply and that is the 3 day rule..

Never buy an issue on a 3rd day uptrend in pennies and sell on that return reverse of a swing on that 3rd day or the outside of the 4th day..After that,if it hasn't gone beyond the lows before the uptick is the time to dump.In other words, never chase a stock..

Have a good day.
Varok
http://www.stockmarketquarterly.com