This Is Why I Don’t Short Financial Companies Like Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE)

I’ve said it once, I’ve said a million times–PennyStocking deals with pump and dumps, frauds, little crappy companies….not real companies, not financial plays, not commodity plays. Tonight’s news that the US is unveiling a plan to back up FRE and FNM means these two stocks are gonna surge tomorrow morning. It’s why the market futures are surging right now. It means that no matter their  

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Thank You Covestor For These 100 Stocks To Avoid

You know how I’m always being weird by saying “I don’t play real companies I prefer frauds and pump and dumps”? Well, obviously there’s my 70% return over the past few months now backing me up, but for further proof, after you check out THIS list of 100 of the most actively traded stocks by people on Covestor, you’ll understand 2 things–

1. it’s pretty much all the most  

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For Heaven’s Sake, Somebody Tell This Guy About Short Selling!

When I read articles like THIS, my blood boils over. Here’s a guy, Jack Silady, with a $400 million fund that’s tanking and he can’t do anything about it cuz his asset class is financial services, a category with $8 billion in assets. This blatant waste of capital is perfectly representative of the dumbasses–really no other word for it–in this joke of an industry.

Probly, nay, hopefully–nothing better/more American than  

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Why I’ll Never Buy Stocks That Are Breaking Down, No Matter How Much Kool-Aid Is Involved

No matter that oil continues hitting its highs, nearly all of the recently hot energy stocks–from the strung-out junkie-like wannabe real alternative energy plays like Capstone Turbine Corporation (CPST), Quantum Fuel Systems Technologies (QTWW) and A-Power Energy Generation Systems, Ltd. (APWR) to piece of crap AMEX plays like Fieldpoint Petroleum Corporation (FPP) and Pyramid Oil Company (PDO)–have faded quite nicely over the past few days. People are scratching their heads and thinking, oil is high, these stocks should rebound, right?

Unfortunately, this gutter of a niche with the worst companies in the world, isn’t that simple. I’m not bashing–I have no positions in any of these stocks–it’s just the reality, these companies will fail and/or their stocks will return to pre-exponential rise prices over the next few months and years. Maybe one or two will stabilize, but that’s pushing it. All their little earnings reports that show such strong growth and profits, ALL of them can and have been manipulated to appear great. Creative accounting, works like a charm, stings investors like a bee.

And that’s why these stocks can  

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The Dangers Of Shorting Hot Oil Stocks With Absurd SEC Rules, A Lack Of Discipline & A Tiny Account

That title is just about the worst combo there is and yet I went full steam ahead, shorting 1,000 FPP five minutes after the market open into a spike I thought to be ill-fated. Nearly right away when I was down 20 cents on my position, I knew I’d screwed up. Despite my warning everyone about the dangers of shorting these rocketships before they go red and the fact that I made the exact same mistake just two days ago, I even refused to take a $150 profit, instead wanting more, almost inevitably getting squeezed for a $600 loss.

I guess it’s true what they say, you can’t t each a greedy Jew new tricks.

I explained my rational for breaking the very rulesI created to protect myself the other day—not that its much of an excuse—and today was no different, except FPP was double the price and I got squeezed for double, 50 cent/share as opposed to 25, too. Fitting, right? Again, I was right about the morning pullback after the spike, it just happened $1 higher than my entry!

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Don’t Short Sell Into Sideways Price Action Of Stocks That Are Still Up Big On The Day!

Lots of folks either have shorted or are thinking of shorting confirmed Supernova MXC here just above $40. Their reasoning—it cracked sideways price action, mistakenly believing it to be the kind of price action I always—or at least should always—look for before short selling one of these rocket ships.

WRONG!

My kind of sideways price action can NEVER occur when a stock like MXC is still up $13/share on the day, or on FPP yesterday when it was up $1.50/share, because the longs have no fear when their stocks are solidly up on the day and that opens to the door to potential end of the day and tomorrow morning at the market open short squeezes. Because they know lots of short sellers are salivating to short these things, just as they were on MXC at $15, $20, $25, $27 (me, but I covered quickly for a-now-proven-to-be-infinitely-wise 40 cent/share loss), and on FPP at $4 (me, covered again, wisely now it seems for a 20 cent/share loss) on and on….  

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Stop Shorting Penny Stocks Randomly, This Isn’t CNBC, I Want You To Profit!

I’m seeing a lot of comments/emails from people re-shorting these pump and dumps waaaay late in the game, just because they missed profiting from the initial dump. Here’s a tip—STOP!

Yes, these companies are all crap (okay, okay 99.9%, but this is the last time I’ll ever qualify that), but you gotta understand crap companies can and do rise faster than quality companies for several reasons:

a.) there’s no pesky actual businesses to get in the way of hyping / putting out fraudulent / exaggerated press releases so investors must only be convinced of the dream, not the execution of the dream, which is helpful considering the harsh reality / inevitable failure of these companies

b.) no pesky morals or ethics instilled in those who manage such companies / promote such stocks  

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To Short Sell Or Not To Short Sell, That Is The Question

There are a great many microcraps surging—some look to be potential shorts, while others, you just gotta sit back and watch them play out:

As I’ve repeatedly posted, I’m short (EDEN) cuz it’s the perfect mix: failing company, quick spike followed by gradual fade and most importantly, the spike was caused by erroneous reporting. Forget about guessing games, TheStreet.com handed this to us on a silver platter!

TIGR’s still great to short, but good luck finding shares!

PDO and MXC Two little oil plays that are spiking, be very careful, remember, they’re not pure pumps as they are tied to that strongly performing commodity (that ain’t easy to short…remember the KOG…which itself is breaking above recent highs aka not a short!)

ENT is another small energy outfit trying to spike here, although its spike is rather gradual as it’s seemingly going for a cup and handle breakout…not a short!

Speaking of not shorts, FEED, WSCI and UFPT can never seem to go down—when stocks go up 4, 5, 6, 7 days in a row, they’re obviously not one time pump and dumps and they can go a lot further than you’d ever expect—take a look at this GENC chart below to see what I mean!  

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The Second CNBC Stock Pump In As Many Days

I’m always ripping on Inspectd.com for being too simplistic/dangerous/giving chart reading a bad name…here’s a perfect example why, GTE, the latest Jim-Cramer/The Rock CNBC/WWE pump…yup, it’s been a whole 2 days since the last one…hurtful to naive investors…unethical…great for speculators…wake the f%#@ up SEC!

Chart shows a clear breakout, but it’s already off its high cuz this ain’t big-time breakout-type news. Sure, shorts are scared—as they should be—Jim/Dwayne/Cramer/Johnson’s no dummie for picking a solidly uptrending stock near its highs…but c’mon, can you smell the fakeout cookin’?

UPDATE: Now TITN breaks out to a new high thanks to a CNBC ention–damn, stock promotion is a happening biz, Lebed, you must be making some good $, right? Maybe CNBC should think about getting reimbursed by these companies, just put a lil disclaimer that no naive investor would ever see…c’mon Ge, you know you wanna, get those annual profits up from $300mil to $400mil, you can do it, you can do it all night loooooooooong!

Disclaimer: I have no position in either stock, I’ve tried playing The Rock’s picks from both sides, some stay up, some reverse, no edge, not much predictability, no thanks…I just think it’s wrong how the WWE frames it, creates a lot of unnecessary bad blood, ya dig

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7 Stocks You Shouldn’t Trade, Long Or Short

Nothing particularly special, but that’s no reason not to get to know some messy chart patterns…aka learn what kind of chart patterns NOT TO PLAY!

A few weeks ago, AsiaInfo Holdings Inc. (ASIA) reported great earnings, now it’s consolidating…blehhhhhh…this stocks loves to breakdown after spiking, but now has positive news for a change. 50/50 up or down, leave this one alone.

Converted Organics (COIN) is full of pumpers and recently executed a perfect double top at $14, but it still broke out of a multi-week base in the $9-$11 range. Wait for it to prove itself above $14 or for the bottom to fall out…until then leave this to the pumpers and suckers.

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Two Examples Why You Should Never Underestimate Takeover Rumors

People love shorting strong stocks that are up on takeover rumors. They reason “these companies are blah blah blah” and “their businesses are blah blah blah”. I won’t use any examples because the details are quite inconsequential, it’s the same pattern again and again. No matter how good or bad a company is, how full of BullShip the management is (good!)(for shareholders) or bad they are (meaning they’re idiots or they tell the truth)(first one is common, second, extremely rare, aka never, but if it did happen, it’d be bad for shareholders because the truth is ugly), the industry, the potential, the hot tip your roommate/coworker/mistress tells you about the play, whatever, these rumors may turn out to be true. So, what are short sellers doing—they’re playing the classic Wall Street guessing game. Right or wrong, they give short sellers a bad name. I want no part of it. Let me explain.  

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