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Microcap & Penny Stocks : IMMM ( I'm Mad Monk)
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To: alchemy who wrote (329)3/25/1997 1:53:00 AM
From: CVJ   of 1480
 
I am a novice at investing in micro-caps (everything has been
401k and IRA mutual funds until the last few months), but if I
might be permitted an observation and a question.

The IMMM price movements are almost "textbook" marketmaker
strategies for accumulating a promising stock; pushing the
price down to scare out some timid shareholders and then let it
rise to lure some more buyers and repeat as many times as they
need to or want to. Each cycle gains them the 1/16 to 1/4
difference coming and going and as the demand increases the bid
gets higher each cycle. Then if the stock hasn't gotten out of
control via a really big event like finding oil, the series of
up and down cycles start all over again. In short, the mm's
manipulate the price to their heart's content. The only sane
way to be in a microcap is for the long haul, I call it buy it
and bank it (in a safety deposit box). Short-term and
day-trading for all but the most sophisticated is just like
asking Hannibal "the cannibal" Lecter over for dinner - guess
what ends up being eaten.

Now the question: what about the claims of AXPL about their
"Electrotelluric" process? They claim that the EMSounder can
only identify likely oil bearing formations while their process
allows one man on foot, in 5 minutes, to identify the actual
hydrocarbons or the lack thereof in a 100' circle as deep as
17000'. They illustrate this difference with a hypothetical
comparison: If each would survey an abandoned gas station, IMMM
could locate the under ground fuel tanks, but AXPL could locate
them AND tell you if there was any gas or oil in the tanks.

How do novices like myself sort the wheat from the chaff? Each
company offers a seemingly valid scientific basis for it's
claims. Do we toss a coin? Or play both? Or neither and stick
to mutual funds and give up the possibility of a big win (which
is why one is in penny stocks in the first place)?

I have 500 shares now after doing the due-dilly that I could,
but honestly, the decision to buy had as much as much to do
with gut-feeling or hunch or intuition or whatever you want to
call it. I suppose if I had any more than a hunch, I would have
5000 instesd of 500.

Thanks for any discussion

cjac
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