Article on the extinction of the sub-penny stock:
Extinction of the Subpenny Stock
by Dan Holtzclaw
The good ole days of finding that subpenny stock which could yield
incredible returns may be going the way of the dinosaur. With the new
rules being passed on the OTCBB market, it will be very difficult to find
subpenny stocks in the future. Why? The simple fact of the matter is
that most subpenny stocks do not or did not comply with the new rule
changes and they are being delisted. The fact that they are not in SEC
compliance is probably one of the reasons that these companies were
subpenny stocks to begin with. If their company cannot file its financial
documents with the SEC on time, how can the company run a successful
business?
I remember just a few months back, you could find a plethora of
subpennies. MPTV, MVEE, SNTS, SYCR, HDOG, USHO... all of these stocks
had something good to offer (the potential for BIG GAINS). At the
beginning of this year, many of those who held these stocks through their
dark days were rewarded with huge gains. I never thought that I would see
MVEE go over a nickel, but sure enough it did. You could have bought MVEE
at .003 not too long ago.
Take a look at this OTCBB statistic. As of March 2000, the number of
OTCBB stocks costing .5 or less has declined by nearly 58%. IN addition,
the average cost of stocks in this range has increased by 46.15%. What
does it all mean? Simply put it means that there are fewer stocks under
.50 and the stocks that do remain are costing more than in the past. So,
is this good or bad? In my opinion, you could look at it two ways.
Number one: this is good for the OTCBB market because it means that the
remaining stocks are of higher quality. These stocks file with the SEC
and that is good for the investing public. The downside is that because
the investing public perceives these stocks as higher quality, they are
going to cost more...and that is exactly what is happening. Way number
two in looking at the current OTCBB dynamics: because those stocks which
did not get delisted are perceived to be of higher quality, they cost
more. Since the remaining stocks cost more than in the past, the
potential for big gains diminishes somewhat. A 5 cent stock has to rise
to 50 cents to yield a 1000% gain, but a .003 stock only has to rise to 3
cents to achieve the same. In the past, there was always a chance that
you could find one of these subpenny powerhouses. Often, they would rise
for no reason in particular. Perhaps it was a momo play or some cheesy
press release that said, "Maybe, perhaps, there is a remote
possibility...that our company will actuall do something worthwhile".
Anything of this nature could send a subpenny stock flying! These days
may be gone forever.
With more and more of the cheapie stocks being delisted, it will be
increasingly more difficult to find that bargain-basement treasure chest
of a penny stock. Perhaps we should quit calling them "penny stocks" and
refer to them as "nickel stocks" because I have a feeling that in the near
future, we may not see many stocks under 5 cents anymore.
This is just my opinion, so take it for what it's worth. In the world of
internet stock articles, opinions aren't worth much. |
