Sure there's risk, lots of it, and i agree completely that the word speculation is more appropriate than the word investment ... but if you are going to be generalistic enough to paint all sub-5.00 stocks as having higher risk than reward potential, then i would take it one tiny step further and paint all equity issues as such.
No, there are no options or margin available for 'pennies', but you know, i never felt i needed the extra leverage -g- ... and the lack of liquidity is in some cases to me an advantage, right now i have fill or kill GTC orders in on both the bid and ask of one little cdnx penny that sort of trades by appointment in a fairly predictable range [wide spread, at the moment i am inside on both bid and ask], long-term i like it and the plan is to build up some paid-off shares ... and the plan is working fine so far, as it has with others ... the lack of liquidity just means that you can play the thing only in a small way, and very carefully - you need the patience to buy right and sell right ..... actually, the one to which i just referred is not the most illiquid i play, there's another on which i have done quite well that has seen exactly fifty trades in the last sixty trading days -g-
The covered call thing interests me but i've never done it yet ... wouldn't think of selling naked calls but naked puts maybe, if i was willing to wear the stock anyway ... lots to learn in this regard ... my background is; 1. canadian bank stocks, and 2. pennies, be they development stage tech or resource juniors, or the latter turning into the former, as is often the case nowadays -g- .... maybe it's just in what you're used to ... i'm holding a little jdu [jdsu on Nas] over the weekend, but man it makes me nervous, especially now that it's filled that little gap down from last Monday [bought it for the gap-filling].
And gold stocks make great traders, while we're waiting for the metal to rise from the ashes ... which it will - all fiat money eventually returns to its intrinsic value of zero ... yada yada [marcosloro, lol] ... actually though, silver and copper may show turns in their cycles first, imho.
Agreed on the idiocy of the pumpers, some of them do promote their share paper like it was the sacraments of their religion, but i don't think it's at all fair to say that this taints all canadian or all penny or all otc-bb companies ... perhaps not even the majority ... only one of my favourite plays has really active internet threads, and it's just been made a takeout offer by DeBeers, so they must perceive some value there.
I didn't make that chart, btw, keith massey did ... well we're getting away from bringing democracy to Cuba, aren't we [see, Elián, how complex is capitalism? - don't let it put you off!] ... cheers, all |
