The brutal world of penny stocks, a first experience. Great story!
To: Cliff Daniel (7443 )
From: Cliff Daniel
Friday, Jul 31 1998 8:43PM ET
Reply # of 7559
Either way Cliff, you only doing the talking not the thinking...
WAMM, Scam, Thank You Ma'am!
The brutal world of penny stocks, a first experience.
It was your typical afternoon at the office. A quick glance at my portfolio showed the
same black and red numbers. Oracle continued to hover in the 20's just a few points
higher than what I bought them at. Verisign was not doing very much either, just a few
good days followed by a few bad days. Overall I was still in the red with this one. I
guess you could say I was caught in the IPO hoopla of an Internet stock. My only other
holding was Adaptec. Can you say gross? They just posted a loss two consecutive
quarters. This stock was heading nowhere but down. I had just about enough of this
legalized gambling called the "Stock Market".
Randomly browsing around on Yahoo I picked up a symbol called ICVI. I added the
symbol to my 'Stocks to Watch' list and left it at that. There seemed to be quite a lot of
activity on the Yahoo thread and the stock was trading around 0.12. I never seemed to
read the press releases on ICVI, mainly due to the fact that they were always smashed
between the daily press releases from Ascend and Level 3. Regardless the stock found
a new base around 0.04 over the next two months and it was too risky. I continued to
do the daily glance at that same boring portfolio. Same story, definitely not getting rich
over night with these Blue chips! A quick glance at the "Stock to Watch' list showed
ICVI up over 100%. What in the world is going on over there? Just another 'momo'
someone has hyped to the moon. I'll pass. For the next three days ICVI was up a huge
amount, over 300%! It's too late, I tell myself. I would be a fool to enter in at these
prices.
The next day around noon I did the same ritual, except slightly earlier in the day.
Adaptec was trading at $16 and down ticking every minute. Stop the insanity! To hell
with these blue chips! I'm down nearly three thousand dollars, in a
twenty-thousand-dollar portfolio. ICVI is heading upward on strong volume. A quick
phone call to my broker ended up being the turning point in my investment career.
Before I knew it I had sold ALL of my holdings (Adaptect, Oracle and Verisign). I was
about to make the bravest investment move I had ever made.
After hanging up I soon realized that I took a $3,200 loss. I felt disgusted to say the
least. I decided that it would not be in my best interest to risk that money in a penny
stock until I have did ample research. I continued to watch the stock the next day. It
was up over 60% the day before. I could have bought in and made 60% in one day!
That's it, I'm buying this sucker. Another quick phone call and I was the proud owner of
38,000 shares of ICVI at an average of 0.47 per share. It could have been 0.39 if I
wasn't so stingy and tried buying with a limit of 0.38 on a stock that had too much
momentum. Instead I paid the price with a market order. I just know in the back of my
mind this thing is going to tank simply because I bought it. Sure enough it finished by the
end of the day we had finished down at 0.43. This was the first finish down in over a
week, just my luck. I guess I had better start doing some research on this puppy since I
neglected to do so before buying. I started searching around on the net looking for some
real information on this company.
In my searching I ran across Silicon Investor and the thread was hopping. By the looks
of the thread it would appear that I finally picked a winner. This stock was going to the
moon and I was on top of the rocket! Marvelous calculations from press releases
revealed an astonishing 2.85/sh book value. All of this for the bargain price of 0.47.
You quickly start to think if terms of 'baggers'. With that book value I was looking at a
6-bagger. Of course, this was only the beginning and Mountain Energy had more
acquisitions in progress, as it was rumored. It would appear that my upside potential
unlimited.
The next trading day it was we gapped up quickly and volume was steep. By the end of
the day we finished up at 0.76. In attempt to control my excitement of a one-day return
of 61% I decided to set a win goal. A modest return of 100% satisfied my goals.
Friends are telling me to sell now, but after reading more and more on Silicon Investor
there was no way I was going to sell this jewel. Stopping by Silicon Investor, what has
became an hourly ritual at this point, still showed positive things. Except for one thing.
All of this commotion seemed to attract what is known as "bashers". Questions were
raised about the validity of the reverse merger. Questions like, "Why would MTEI give
up 35% of their equity to a defunct penny stock (ICVI)?" This seemed to be the most
frequently asked question at the time, as well as accusations of a "well orchestrated
stock promote". It was best to just ignore these obnoxious posters and stay on our
mission. It was rumored that we held nearly 50% of the float in tight hands.
It didn't take long before those evil Market Makers, on their never-ending mission to
cover shorts, drove the price down to 0.50. Fire sale prices everyone exclaimed! It
didn't take me very long to call up my broker and get another 12,000 shares. After all,
averaging up in this stock was not a bad thing. Now, with commissions I am in for about
$27,500. That is small change compared to some people, but to me that is nearly all I
have in savings, minus emergency money. This is a good thing, because when you start
thinking in terms of two and three baggers the reward is much greater.
We continued to hit heavy resistance before we would hope to see the $1 barrier so
many talked about. Bashers and the like continued around the clock. Still raising the
same unanswered questions. Frankly no one had the real answers, but we sure knew
that we had at least 200 million dollars in assets somewhere.
Over the next week or two we fluctuated back and worth, sometimes dipping into the
30's. We were all just waiting on news to drive us over the $1 barrier.
Finally after a hard two weeks this baby broke the $1 barrier. Everyone was so excited
to see this rocket ship take off. The float was held tightly as everyone e-mailed share
counts. She wasn't done yet. The next day this thing shot over 1.60. I was so happy I
was calling old friends just to say high. I was thinking about what kind of house I
wanted, and what color Boxster I was going to get. After all, my 27k investment was
now worth $77,000 is just two weeks. My original goal was just to get to $50k and pull
out. But not now, because this thing hasn't even left the atmosphere yet. And when it
does I'm looking at a pile of cash. What ever could I do with the money when this thing
breaks the two and three dollar mark? I can set my parents up nicely, let my father take
an overdue retirement. Whatever I wanted, it would seem.
The threads were hopping like never before. Three to four hundred messages being
posted in hours it would seem. Bashers and the like started posting "half-truths" to scare
the investors away. It was clear that their motive was to drive this stock down because
they were shorting. It was either that or they were paid by those evil Market Makers to
drive the price down so they could cover those shorts. Still it was recommended just to
ignore them. Who cares about Joe Gort's involvement with ICVI, and John Christiansen
for that matter? We know that they have 2.85 book value, which by the way could be
over $4 soon. This is MTEI and it was totally new management. ICVI is a thing of the
past, so let's forget about them.
After reaching our new high it didn't take very long for the price to start falling. It would
appear that someone pulled the rug right out from under us. Conspiracy theories about
the bashers and the Market Makers were hitting the threads. After a few more straight
days of steady downward trend of our stock left us back under a buck. And before you
could blink an eye we were looking at forty cents again. No press releases were coming
out. We were strictly running on momentum, and it would appear that momentum left us.
We had to rely on people averaging down and new buyers in order to stabilize this
stock. Unfortunately new investors at this point was not look very good since this thing
received more negative press on Silicon Investor than anything else. By now all the
threads were bashing each other. It was a total nightmare!
"When the symbol changes to MTEI occurs we will have the last laugh." This was our
new fuel. This one event was our only short term hope. This would bring us back to $1,
and we were sure of it. Day by day the stock price started to fall little by little. It was the
product of Day Traders and Bashers. Never did the thought of selling cross my mind.
There is just too much in this company to sell out now. I would hate to see the price go
to $5 after I sold. I'm sticking with it. Days later we would see the 30's. Those Market
Makers have to be stopped! I'll just fire off a quick email to the SEC about this." There
is good news on the horizon though. The ICVI symbol change went through and a new
star was born. We were now MTEI. We have now shed the name ICVI and all the
negative things about them. Still the bashers came day in and day out. Countess hours
were spent on the threads posting negative information like: "How does MTEI come up
with 2.85/sh valuation on their properties?", "Who is funding these acquisitions?", "What
is Joe Gort and John Christiansen still doing with the company?". We were instructed to
ignore their posts. It was just a tactic to drive the price down. Two days later MTEI is
trading at 0.80. Things are on the up and up and I'm back to day dreaming about cars.
The persistency of the bashers took its toll it would appear. The price would soon
realize a long slow fall. The same questions were asked over and over, but we couldn't
provide the answers. Bickering started back and forth between the bashers and the
longs, that is the one that didn't sell. Then it was bickering between the longs. Soon it
was similar to the last scenes in Titanic. You could only hear a few voices left in the
crowd. The so-called longs were tucked away safely in a boat, heading for higher
grounds. That didn't stop the bashers one bit. They keep going on and on about the
profitability of coal mining. Would it even be worth mining at that? Yes, because they
are not going for coal directly, it's the coal bed methane that MTEI is after. After all,
they own all this land which the USGS states has minerals worth over 200 million
dollars, or at least that is what the press release from ICVI stated. Who would argue the
government?
Weeks and weeks go by while the longs are waiting for the results from Stagg
engineering. They were hired to estimate minerals on the land MTEI had purchased to
rights to acquire. Over 8000 acres spread over many different properties were going to
be evaluated. The results would easily bring us back to true value of MTEI stock, which
is still believed to be around 2.85/sh. No one seemed to think why all of this land was
being handed over to MTEI for pennies on the dollar. Thanks for the bashers were
asking. Probably just some land that was forfeited for back taxes, but who cares
anyway. We finally broke the forty-cent barrier and soon found a new base at 30 cents.
People were anxious and predicting a huge run up in price after the forthcoming
announcements. The excitement was back in the air.
Finally people started to take heed to the bashers warnings and decided to set out on a
road trip to Houston, where they would meet MTEI's management face to face with a
list of questions. Seven people took out their own time to make the trip. In the meantime
the thread was anxious to hear the results and even predicted a price increase. Of
course some predicted a decrease as they felt the truth would be finally told. The group
came back and posted some information. Nothing suprising, to say the least.
A few days later MTEI makes an announcement that they have fired Stagg engineering
because they were unable to complete the job. The stock price started to plummet into
the twenties and nearly reach the teens before it pulled back in the mid-twenties. "Calm
down people! They fired Stagg for a good reason. They dropped the ball! This proves
that MTEI means business and they want results!" I feel relieved to hear that the
company is looking out for its investors despite the lack of press releases issued over
the past 30 days. DUNN was the new guys in town and they were going to get the job
done. That was not good enough to satisfy some investors as they sold their stock.
The stock price dipped in the teens and I began to wonder. I turned close friends to this
stock and not only was I losing a lot of money I have cost my friends thousands. What
to do? I would never want to take a loss of $18,000. No way in hell! I decided to dig
as deep as humanly possible about MTEI and it's shell ICVI. Some of the things I
discovered were outrageous. Rumors that a lot of shares were added to the float. So
much that this float might not float in water. And indeed it was taking the stock price to
the deep. Other rumors consisted of lawsuits being filed against ICVI. Questions about
land ownership, illegal selling of shares. You name it. And a couple of more I would
prefer not to divulge at this time.
I made up my mind. I will sell no matter the loss. Fortunately I was able to unload
50,000 shares the next day in 10,000 blocks. I took at hit of $17,000 with
commissions. I was devastated. I no longer had visions of houses and cars, instead I
was worried that if I were laid off I would not be able to pay the bills. Needless to say, I
was restless and I know a few hundred people that were in the same boat. The Titanic
you might say.
Some more information came by the way of one some of the original people who made
the Houston trip. The float, believed to be 70 million shares had mysertiously grown.
However they did not want to publicize this to the thread in fear of creating a panic sell.
Also, as of late I've hear that MTEI had a lot less land than was originally stated. Even
some of the original 7 sold their shares for personal reasons or fundamental changes.
Two days ago SEC halted trading on MTEI issuing press about the accuracy of assets
stated in the press releases by ICVI. Trading is halted for at least two weeks and
possibly months as we see in RMIL. We now have hundreds of individual investor's
cling to the back of the boat while it's going down nose first. They are helpless and can't
get out if they tried. What will come of the SEC probing? It didn't take me long to
realize that if I were just to take the time to investigate two of the questions that the
bashers asked I would have come to the realization that this possibly is a scam. Nine out
of 10 penny stocks are losers, unless you are in the on the pump and out at the dump.
What remains to be seen by the SEC? Time will tell. In the mean time speculation is all
we can go on. People still stand strong hoping for a positive outcome when this is over.
No one really knows what is going to come of this. I have learned a great lesson in this
whole thing. I guess you can say it was tuition.
I have no one to blame but myself. A lot of the people now facing financial difficulties
are trying to figure out what to do. A lot of them are blaming other individuals for their
current situation. In reality, they have no one to blame but themselves. I will continue to
post information that I feel is pertinent no matter if it's viewed negative or positive.
I have to give credit when credit is due. If only I would not have '+++clicked+++' by so
many posts I could have seen this coming. Is MTEI a scam? I certainly hope not. We
will found out soon enough.
The views presented within are just my experience with this stock. They are certainly my
opinions and should be viewed accordingly.
Cliff Daniel |
