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Mentor Updates

Millionaire Mentor Update: To the Moon! An OTC Fairy Tale

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Written by Timothy Sykes
Updated 1/25/2023 14 min read

Between promoter bots and sketchy companies, I’ve had it. No OTC fairy tale comes to a good end.

I won’t stop trading OTCs. But I also won’t stop teaching. My job as a teacher is to expose the risks. As a trader, I’m being very safe and suggest you do the same. Remember, trading is a battlefield.

Will you get sucked into the story? Or will you accept it’s a fairy tale and slay the beast? Keep reading for lessons learned from an OTC fairy tale.

First…

Karmagawa Proudly Announces the Jack Kellogg Learning Center

I’m so proud to announce our 74th school/library and the 25th with the Bali Children’s Project. In honor of student-turned-master Jack Kellogg, we hope it inspires a lifetime of learning.

Our partnership with Bali Children’s Project includes another six learning centers underway. If you’d like to support one of our projects, visit Karmagawa and click on Donate Now.

Congratulations Are in Order

Massive congratulations to Mariana — the first female Trading Challenge student to hit the $1 million* milestone.* Mariana was featured in this recent post about upcoming female traders.

(*Please note that these kinds of trading results are not typical. Most traders lose money. It takes years of dedication, hard work, and discipline to learn how to trade. Individual results will vary. Trading is inherently risky. Before making any trades, remember to do your due diligence and never risk more than you can afford to lose.)

Check out Mariana’s tweet that highlights her incredible February results.*

Again, Mariana’s results are NOT typical. She’s exceptional — so get inspired!

Now, let me tell you a story…

Trading Mentor: To The Moon!

You don’t have to look far to see that promoters are alive and well. Back in the day, they ran on emails and cold calls. The SEC cracked down, but now all you have to do is check social media, Twitter, and free chat rooms to spot them…

OTC Fables and Other BS Stories

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Do you remember, as a child, your parents reading you fairy tales?

That’s what all these companies are — OTC fairy tales. Except there’s rarely a happy ending. The sooner you get that through your head the better.

In my top penny stocks weekly update, I do a brief write-up of five companies. I often write “Company X is in the clean-energy sector” or “Company Y is in the EV space.”

Please understand, I mean Company X claims to be in the clean-energy sector. Half the time the ‘About’ page on the company website says something different.  

What’s that? It doesn’t make sense?

Welcome to OTC fairy tales. Remember…

All These Companies Are Fiction

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That’s how cynical I am. I mean all OTCs. Every single one.

These companies merge or change sectors every couple of years. They move from cannabis to real estate. They shift from mobile app development to crypto mining. One day a subsidiary is in the floor-tile business, the next it’s a digital payment gateway. (You can’t make this stuff up.)

If a promoter does their job well, they spike the stock. Then insiders and promoters sell shares and make a killing. All this without ever selling a real product. Or anything else, for that matter.

Some of these companies have been through so many tickers it’s like alphabet soup trying to figure out what’s what. I expect every OTC stock to get halted or go to zero. But it doesn’t matter in the long run, because they’ll just find another way to defraud investors.

Before I get bombarded with DMs and emails…

I’m not shorting these companies. I just understand they’re fake. They’re fiction. Most of them have ZERO revenue, ZERO products, and ZERO hope of ever becoming a real company.

Be more cynical. Disbelieve everything.

If you see this…

REVOLUTIONARY BATTERY!

 Or…

Hot New Clean Energy Company!

Or…

World Changing Tech!

Take a deep breath and remember…

It’s BS. It’s a promoted piece of crap. They’re all promoted pieces of crap.

And if you see people posting on Twitter about due diligence and conversations with the CEO…

It’s all a joke.

You don’t have to believe these fictional stories. If you want to sit down and read their little fairy tale, that’s fine. Give them a round of applause.

But stop believing their stories. Don’t believe the press releases. Don’t believe it when these companies say they’re doing good for the world. They’re not. It’s storytelling. It’s like Hollywood.

Just because I quote a press release doesn’t mean I believe it. I’m trying to educate you … to help you understand which catalysts move penny stocks.  

All OTCs Are Risky

If I was the SEC commissioner, I’d probably halt ALL these companies. But it would crush the hopes and dreams of millions of degenerate gamblers.

Trading is inherently risky. But if you hold any OTC overnight … there’s a risk of it getting halted. Right now the SEC is cracking down.

Want proof?

Check this list of OTCs halted by the SEC on February 25. 15 stocks in one go. Read the entire order. People think I’m over the top when I call OTCs junk. But the order says it all…

  • “[…] questions have arisen as to their operating status, if any […]”
  • “[…] certain social media accounts may be engaged in a coordinated attempt to artificially influence their share prices. […]

NEVER believe the hype. EVER. And while the SEC is reeling in the worst of the worst, beware…

The Fable of the OTC Overnight Play

It’s rare for me to hold OTCs overnight recently. And only with a very small dollar position. The potential gap-ups have been weak lately. It’s just not worth the bigger risk. Now, with the halts, I’m not holding OTCs overnight at all…

Why do stocks get halted by the SEC? It can be for a variety of reasons. Corporate Universe, Inc. (CVEM: COUV) got halted due to “questions regarding the accuracy of information in the marketplace.”

Check out the COUV one-month chart to see why it’s so risky to hold…

COUV penny stock chart
COUV chart: 1-month, 5-min candle, SEC halt — courtesy of StocksToTrade.com

Imagine being stuck in COUV when it got halted. Or watching it open two weeks later down over 90%. That’s the risk. That said, the smart move, if you were stuck in COUV, was to cut losses when it opened. Good luck to the bagholders. COUV got the dreaded skull and crossbones. It’s all part of the OTC fairy tale…

Slay the Dragon But NEVER Believe the OTC Fairy Tale

OTCs aren’t long-term investments. Don’t let any promoter tell you differently.

Remember, bots spread most of the hype you see on social media. I’ve been saying it for weeks … promoter bots are everywhere.

So it was no surprise when cybersecurity analysts said bots were hyping meme stocks like GameStop. (NYSE: GME) Sadly, too many newbies fell for the BS.

In the penny stock gutter, which most of Wall Street looks down on, the promoters get away with a lot more. The cybersecurity analysts don’t give a crap about a sub-penny that spiked 4,000% in a few months. It’s off their radar.

But uneducated newbies LOVE these plays.

Me … I’m cynical. But I’ve been dealing with bots for a while. (When I get spammed with the same message by 50 different Twitter accounts, it’s obvious to me what’s going on.) And I’ve been dealing with promoters for years.

Promoters: Purveyors of Fine Fiction

Promoters will have you believe a stock is the next Amazon. It NEVER is. Amazon and Microsoft were never promoted penny stocks like these. They might have been low-priced at one point, but they never did promos.

That’s the difference! 

Companies that do promos fail. This is the secret. How do I know? I look at history. I’m a glorified history teacher.

So you can ignore my warnings and learn the hard way, or pay attention. It’s up to you. Here’s an example…

Since we’re on the subject of OTC risks and trading as safely as possible, let’s look at a trade from last week. It worked out, but keep reading to find out why it could’ve been a disaster. Remember, hold and hope is not a strategy.

Trade Review: OTC Fairy Tales Have Bad Endings

If you expect the worst, you won’t be disappointed. Check it out…

Medifirst Solutions, Inc. (OTCPK: MFST)

StocksToTrade Breaking News alerted this one…

(Quick disclaimer: I proudly helped design and develop StocksToTrade and am an investor in it.)

On February 22, the company announced it was sponsoring a clinical study for a breast cancer diagnostic device.

Here’s the February 22 intraday chart for MFST with my alerts…

MFST penny stock chart
MFST chart: February 2 intraday, STT Breaking News play — courtesy of StocksToTrade.com

As you can see, it was spiking fast. I got a partial position on a dip off the highs. My goal was 10%–20%. It looked like it was struggling to keep going, so I got out. At $878 in profits*, it wasn’t a huge win.* But it hit my goals.

(*Please note: My results are far from typical. Individual results will vary. Most traders lose money. I have the benefit of years of hard work, dedication, and experience. Trading is inherently risky. Do your due diligence and never risk more than you can afford to lose.)

When it kept going, I considered going long overnight. Since it failed to close strong, I didn’t want to risk it. And … I’m wary of holding OTCs overnight right now.

As it turns out, my cynicism was spot on. Check out the MFST five-day chart…

MFST penny stock chart
MFST chart: February 22–26 2021 — courtesy of StocksToTrade.com

Why the tank? The day after I traded MFST, the CEO was arrested for securities fraud. He “allegedly received kickbacks from a corrupt broker and concealed the role of paid promoters from investors.”

Millionaire Mentor Market Wrap

I’m trying to get you to think the right way. Many of you want it to be an exact game. You need to think like an experimental scientist. A very cynical and skeptical scientist.

All these companies are fictional. This niche is basically a joke. The supposed market cap doesn’t matter. These companies are worthless. Pretend all their stocks are going to zero.

Here’s the caveat…

In a bubble market, OTC fairy tales can go up. With enough promotion, an OTC fairy tale can go up in any market.

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Your job is NOT to find the next Microsoft. It’s to take advantage of volatility. When the setup is right, trade like a sniper.

How do you know if the setup is right? Study. Get experience trading small. Study more. Practice. Adapt. It’s not an exact science. But I assure you the fairy tale isn’t real.

What should you study?

Trading Education Resources

If you’re new to penny stocks, start with my free penny stock guide.

To get a solid foundation in the basics read “The Complete Penny Stock Course.

For a more immersive experience, try the 30-Day Bootcamp. (“The Complete Penny Stock Course” and my “Pennystocking Framework” guide are bonuses.)

And if you’re ready for the ultimate challenge, apply for the Trading Challenge today.

What do you think of the OTC fairy tale? Comment below, I love to hear from all my readers!


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Author card Timothy Sykes picture

Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (205) 851-0506 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”