Why penny stocks stink

Alexander Green has this to share on penny stocks. His views are congruent with mine.

Long Shots: The vast majority of tiny, unprofitable companies are such ridiculous long shots, they don't even merit your attention. Most of these companies have little, if anything, in the way of profits, not to mention the first prerequisite: sales.

Wide Bid/Ask Spread: You could drive a cement mixer through the bid/ask spread on many penny stocks. For instance, if a stock is offered at 30 cents and bid at 24 cents, you're down 20% as soon as you get your trade confirmation. (And that's before commissions.

Low Liquidity... High Risk: Penny stocks are thinly traded and easily manipulated. You may buy a penny stock and see it zip higher. But then try getting out. It's pretty disheartening to know that you can drive down the price of your stock simply by selling a couple of thousand shares at market.

Often referred to as a "pump-and-dump" a penny stock scam is when the insiders talk the stock up on one hand while bailing out like there's no tomorrow on the other.

That's usually because despite the great story (and make no mistake, the stories are always fabulous) the company's genuine business prospects are usually nil. But penny stock promoters want you to trust them and believe in the hot tip.

BOA has broken below neckline

As if leading the Dow, BOA has broken below the neckline of head and shoulders pattern, signalling more downside. Shall I panic, and sell with the crowd? No. I will be looking to buy more. It is not time yet for the bear to arrive. The current price levels are simply too low.

Dow to tumble 'several thousand points?'

According to this article, Robert Prechter predicted that the coming months hold the potential to be the most exciting so far. The Dow could be targetting 8,000 once the neckline of its reverse head and shoulders is breached.

Time to buy stocks now

It was a tough week for the stock market, amid concerns that the economy has stalled and signs that the U.S. job market is headed backwards.

But are you spending too much time listening to what Alexander Green calls "the siren song of the naysayers?" He says many investors are doing just that - and could regret it in a year's time.

While acknowledging the negative forces in the United States economy and market, Alex says many are ignoring the reasons why stocks could be higher in 12 months - including two key trends. He explains what they are - and why you should be buying stocks now.

The target for BOA is $29

The target price for BOA is $29, says John Paulson in this report back in May. When does he expect the target to be reached? End 2011.

John Paulson says now is the time to buy a house in America

John Paulson says now is the time to buy a house in America. He is bullish on real estate and gold. Paulson, the man who made billions shorting financial stocks before the crisis, says we are now at the tail of the credit crisis, which has stifled much home buying. He believes we are in the midst of a sustained recovery with a less than 10 percent risk of a double-dip recession. But while he's bullish on America, he's not as optimistic on Europe, calling it the "one soft spot" in the world.

Robert Prechter is bullish on dollar and bearish on stocks

Robert Prechter is bullish on the dollar and bearish on stocks for the moment. This is because there is 6% bulls left in the dollar, as on 11 Aug 2010. As for the stock market, studying the Dow's wave structure since the top in April 2010 and comparing it with other wave structures, he discovered a similar set-up to 1987 before the October crash. He adds that "It doesn't mean there has to be a crash, but it does mean keep your cash cool. The market needs another leg down." The full report here.

August is a bumpy month for stocks?

According to the CLSA Feng Shui Index for stocks, 10 August to 7 Sep will be bumpy for stocks. This is becuase this is the month of the Metal Monkey and "Springers (Tigers) and swingers (Monkeys) make for strained bedfellows,and we’ll all do well to watch our health, wealth and happiness during these next few weeks. Expect volatility in all spheres. That said, when the going gets tough, the bargain-hunters go shopping, and this month’s market jitters should see some value propositions carelessly cast aside."

How accurate is the almanac?
In Feb, it predicted good month, but stocks went down. 0-1
In Mar, it predicted bumpy month, but stocks went up. 0-2
In Apr, it predicted bumpy month, stocks peaked. 0-3
In May, it predicted bumpy month, stocks went down. 1-3
In Jun, it predicted great month, stocks went up. 2-3
In Jul, it predicted good month, stocks went down then up. 2-3
In Aug, it is predicting bumpy month. What next?

This strategy is definitely worth researching

I recently heard about a strategy which allows an investor to earn rent on his shares. It is commonly known as a covered call strategy. According to Karim Rahimtullah, "When you sell call options against your shares that you already own, you’re getting paid to sell your shares at a higher price.
And that only happens if the shares close at or above your chosen strike price when the options expire. Think of it as collecting rent from your portfolio. And who doesn’t like collecting rent?"

Definitely a great idea, but how to do it? Will explore more on this.

Is BOA worth buying?

I am vested in BOA (America's No.1 bank), but am running a paper loss. According to this article however, BOA is definitely a buying opportunity right now. This is because earnings are expected to rise next year due to reduced provisions for bad loans.

Institutional Buying actually increases during last two months when markets corrected!

Stock buying by institutions actually hit a peak last month, even as retailers sell out amidst the stock market correction. They are betting that forecasts for the fastest US profit growth in 15 years and economic expansion averaging 3% through 2012will help equities recover after S&P 500 fell 13% in May and June. Personally, I have used the correction to enhance my positions.My portfolio now include:

Bank of America 15.06
NOL 1.93
SembMar 3.80
SOHO China 4.87

Citigroup says China equity market near bottom

China's stock market, the worst performer in Asia this year, is near bottom, and may rally as much as 14%, as policy tightening concerns ease amid slowing economic growth, according to Citigroup Inc. The Shanghai Index may reach 2800 to 3100 before
year end. But, the market will be mixed in the near term before being spurred by a
"liquidity rally". Recommended sector are consumer, insurance, transportation, healthcare, auto, technology and electrical machinery and equipment.