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Microcap & Penny Stocks : Madera Int. (WOOD) -- Ignore unavailable to you. Want to Upgrade?

To: Trooper who wrote (2643)	1/3/1999 7:53:00 PM
From: StockDung	Respond to of 3693

Buying And Selling Net Stocks With the Internet stocks setting new highs in every respect: prices, Price to Earnings Ratios, Price To Sales Ratios....almost any way you want to look at them, you've got to be careful about being in this sector. And if you're determined to have some of these rockets (some rockets crash remember), here are a few ideas on how to buy and sell them. First, recognize that valuing these stocks in a traditional way doesn't apply. Understanding that makes you realize that it's impossible to know when something is cheap and when it is expensive. For example, if you're considering an internet stock with a P/E of 250 (and most don't have P/E's because they don't have earnings), then you obviously don't care about the P/E. That's because it would take 250 years to recover your money if the earnings didn't increase from their current level. So buying the net stocks says that you're looking to trade them or hold them for a very long time. The first applies because these stocks are very volatile. The second idea applies because some of the stocks don't expect to show a profit for several years. If you're buying them for the long term, then wait for at least one down day before you step in. If you're looking to trade them, take these steps. Take a deep breath and buy some of them. Just put in your market order and own the stocks. Now get ready to get out. But not on the upside. Let your stocks run if they're moving up. Rather put in some stop orders which are about 5-10% below the levels in which you bought the stocks. That way you're going to limit your downside losses. Here's how the stop loss works. If a stock (let's make up one: e-bargain) is trading at $100 a share, and you buy it there, you can immediately put in a stop order to sell at $95. That way, if the stock trades at $95, the next bid for e-bargain will buy your stock. It may be at $94 or some other lower number, but you will sell your stock on the next bid. Why do you want to get out so soon and so close to your entry price? Because these stocks can look like submarines with holes in them when they're going down. You can preserve most of your capital and choose another entry level to get back in the game. If you don't use a stop order and simply ride the stock down, you have no flexibility, and you may decide to sell the stock at the bottom, just when it's about to turn around. You're looking to take small injuries, not mortal wounds, in this game. So if you're determined to be in the net stocks, buy several of them, let your winners run, and put in stop loss orders below your entry level. If your stocks do move up, keep moving your stop levels higher so you're always within a 5-10% loss from the top. And yes, the losses hurt, but you'll be able to play the game some more if you take the little ones in a hurry.