Penny Stocks & their Pump and Dump Schemes

Discussion in 'Trading' started by gmst, Jun 11, 2013.

  1. gmst

    gmst

    I am very well aware of the pump and dump schemes (sent by newsletters, spam emails etc.) by players on stocks trading in OTCBB space.

    However, I just thought about this:

    1) How many total penny stocks are there in US?
    2) Is there any official website for them? I tried google and got some links but am finding it tricky to identify if an official website exists.
    3) Is there any reliable source of historical price & volume data for OTC BB stocks? either paid or free on the internet.
     
  2. gmst

    gmst

    Just a thought on investing in these stocks on fundamental-statistical basis

    If you take 10k and invest 100$ each in 100 penny stocks and leave them for 5 years. Lets say average price of each penny stock is 10 cents. so, you buy on average 1000 shares of each penny stock.

    If after 5 years, 2 companies become successful in expanding and are able to grow into a pan-state presence, and say their stock price goes to 5$. So at 1000 shares each, these 2 stocks will have a value of 10k. Anything else you make is bonus.
     
  3. gmst

    gmst

    Another thought on profiting from these stocks by just participating passively in a pump and dump scheme

    In this case there is no fundamental analysis. Just pick 100 stocks randomly and invest equally in them.
    Now interestingly - lets say odds of a penny stock going from 10 cents to 5$ is not 1 in 50 (as in above example) rather is 1 in 500 on purely fundamental basis. However, even if 99.9% of penny stock companies are destined to fail, still it surely can happen that stock operators pump 10 stocks out of your 100 stock portfolio over the next 5 years, and as soon as stocks go from 10 cents to a dollar, you sell that stock and sit on sidelines. So we are looking at a profit of 90cents *10 stocks*1000 shares = 9000 USD. If other 90 stocks have same value over the next 5 years, liquidate the portfolio of 10k for 19k.
     
  4. Pinksheets.com ...this game has been almost completely shut out. Finra has come down hard on broker delares to due their due dilly before accepting any paper. Before they would just accept with an opnion letter and before that with pretty much nothing...Now the paper has to have a trail all the way back to the issuing company. So an opinion letter is no good any longer. Back in the day paper would clear overnight...peace

    there are probably no firms left in the us taking paper..clearing firms just don't want the headache..penson etc....unless its above the yield sign and then its going to be very hard.
     
  5. emg

    emg