Today, let’s talk about penny stock hold and hopers…
A few years back, this guy contacted me by email to tell me he’d lost a bunch of money investing in weed stocks. He’d been following the Wolf of Weed Street on Twitter. Then he invested his nest egg, watched it grow fast … and watched it tank even faster.
Realization set in. He and the rest of the ‘Wolf Pack’ were headed down a slippery slope. So he went to Florida for a face-to-face with the Wolf.
Later, as he tried to dig himself out of the mess, he got in touch with me. I told him every stock he was in was a pump and dump. Sell it all.
He wrote about his experience in “Men’s Journal.”
Later the three of us — me, the article author, and the Wolf — went out to dinner. My treat. Read the article to see what happened. Then bookmark it. Come back to it any time you think the penny stock you’re about to buy is the next big thing.
Why? Because while penny stocks can spike big, too many people fall in love with the technology or the idea behind the company. And they go down with the ship.
Table of Contents
- 1 Ride the Hype — But Don’t Buy BS
- 2 It’s the Same Pattern Every Time
- 3 Experience and Honesty
- 4 Study the Past to Prepare for the Future
Ride the Hype — But Don’t Buy BS
These stocks literally…
Never. Work. Out.
You have to learn to ride the hype, to buy the hype. But don’t hold and hope. Respect the fact that it’s 99.999% likely to fail. It happens over and over again.
Ignorance Is NOT Bliss With Penny Stocks
Newbies aren’t bad people, they just don’t know what they’re doing. (My FREE guide to penny stocks is a great resource for new traders.) Promoters, on the other hand, they kinda are bad people. But whether you’re just dumb and ignorant or manipulative and ignorant, you’re gonna lose. Either way, you’re gonna be wrong.
Stock Trading Twitter Battles
“Weed is gonna be legal. So much money is gonna come pouring into this industry.”
“After it happens, no one is going to know who Tim Sykes is.”
So I was battling the Wolf of Weed Street on Twitter. He believed in his companies. Yes, he made a lot of money on the way up. And a lot of his followers made a lot of money. On the way up.
But he didn’t get off the ride at the top. He truly believed pot stocks would just keep going up.
I kept trying to tell them that it didn’t matter if pot became legal. It didn’t matter if it became a big business. The pattern was exactly the same and newbies were getting crushed.
The author of the “Men’s Journal” article believed, too. The ‘Wolf Pack’ believed. They were saying things like, “This is a new industry, Tim Sykes is a dinosaur, he doesn’t understand.”
Then when everything crashed exactly like I said it would, the writer saw what was happening.
It’s the Same Pattern Every Time
What does the big weed stock run of 2014 have to do with today? Everything. The same pattern just keeps coming. Let me show you some more recent examples…
Verb Technology Company, Inc. (NASDAQ: VERB)
A good example is VERB. This was being pumped a while ago. And I was fighting every naive sucker and promoter who was involved because the stock was just going up.
It’s crazy the amount of absolute morons on $TWTR if they just studied and changed their mindset they could change their lives, but they resist and invest in pumps like $VERB (which I warned about for months before its 90%+ drop), don’t study & ignore my rules at your own risk!
It wasn’t a question of if it was gonna fail. And they were trying to show me product demos and new agreements. I was saying “I don’t care — it’s a promoted stock.”
Here’s the VERB chart:
When you look at the chart, understand VERB never hit the highs you see. It’s a true penny stock. Ticker changes … reverse splits … all to keep the price up. So the chart starts when the ticker changed to VERB. And just before it changed ticker…
Somebody was putting money into the promotion. They weren’t putting money into product development. So you have to wonder, why is somebody spending money to get the stock higher?
Here’s another example…
Kraig Biocraft Laboratories (OTCQB: KBLB)
Back in April, KBLB had a good press release, big volume, and a big percent gain. I was buying the first green day — which is a pattern I like. I thought it would spike again on day two. It didn’t. The big breakout was on day eight.
Sometimes the first green day doesn’t work exactly. But again, I was on the right track. The stock quintupled and then crashed. When it crashed, I tried my dip-buying strategy. But it didn’t bounce perfectly.
Take a look at the KBLB one-year chart:
Then when KBLB got all the way back up near its highs, I went for the breakout. It failed, but I recognized it wasn’t breaking out and got out for a small profit. A lot of people didn’t. They believed in the company. And they lost.
Here’s an even more recent example…
This is a stock that came up from under a penny all the way to over $2 a share. That’s a ridiculous percent gain. Whether it’s promoted or not. (They put out a press release saying they just became aware there was a big promotion. Companies always like to play dumb.) And I don’t care whether they knew or not. The fact is, there was a promotion.
So if you look at a lot of my recent tweets, you see I’m fighting with DCGD longs, bagholders, or promoters. I don’t know the difference, and it doesn’t matter. All I know is this follows my pattern.
To anyone who falls in love with $DCGD or $VERB or any stock/sector pleas read https://t.co/045R8ZJo7b its the SAME fucken pattern every time no matter what promoters try to say, don’t believe me just look at history. Can’t fight stats/facts but if you do then learn the hard way
The crazy thing is the bagholders, pumpers, and believers keep trying to tell me how good their company is. And how wise their CEO is. It follows the same pattern. People are just idiots.
Not to mention the typical penny stock promoters saying $DCGD is going to the moon even after its 20,000% gain the past few weeks (the company even had to put out a PR disavowing the pumping they claim to be unaware of lol), what a fucken comedy this all is…
I’ve seen this a lot. So yes, I was ripping it even as it was going higher. But just like during the big weed stock run, I was getting blamed when they crashed. I never shorted DCGD. And I never shorted KBLB.
Pump or Not, Always Lock in Gains Along the Way
These are low-priced stocks. You don’t know how far they’re gonna go, and shorting is tough right now. And I don’t mind buying these. But at the same time, when I’m buying I lock in 10%–20% gains along the way. I don’t hold and hope. I trade with these rules.
And recently DCGD made another run. My guess is that the pump a few weeks back was because some restricted shares became unrestricted. Often you’ll see pumping going on right before insiders can sell.
Here’s the DCGD one-year chart:
Pumping happens to get the stock price up so insiders can sell at inflated prices. Whether that’s what actually happened … that’s what it looks like. So I was ripping on this long before the crash, and then I got blamed for the crash. But I was buying it. Not shorting it.
Learn to trade rather than follow someone’s Twitter pump. And if you’re gonna learn to trade, be careful choosing your teacher. Do they share all their trades — both wins and losses? Do they know the patterns? Do they have experience?
Experience and Honesty
I like being honest.
So even if a stock is going higher, I’m gonna say pump it higher. But I’m still not gonna believe in the company. And I’m not gonna be surprised when everything comes crashing down. I’ve seen it too many times.
Like Trading Challenge student suhwateeze said in chat the other day: “Once you really believe in them, the promoters have done their job.”
Study the Past to Prepare for the Future
The key is not being ignorant. Study up. Learn from the past because it’s the same pattern every time. What you read about in the “Men’s Journal” article — it’s gonna happen again. Will you be prepared?
My goal with the Trading Challenge is to be the mentor to you that I never had. I’m not that great at math. And I became a multi-millionaire without having a teacher. But I made a lot of boneheaded mistakes along the way. I teach so you don’t have to make the same mistakes.
Recent Tweets, Comments, and Trades from Students
Here’s a look at some of my students’ recent comments in the chat rooms and on Twitter…
From the Trading Challenge Chat Room
Profit.ly user BrandoKlein: “played the bounce on $SPNV from yesterday’s crash 6k shares long @.3480 out @.41 for a $380 profit. gl all today. No trades until tomorrow.”
Or this one from Profit.ly user PapaD: “$ONCS: In at $2.09. 1/2 out at $2.27, all out at $2.28. It’s putting me to sleep. Small position, small profit, right morning plan.”
And this from greenking49: “another day in the office. 1 min left. $300 on the day. see yall tomorrow.”
Remember, singles add up…
How about this first trade from Hal3000: “1st Trade $NM, 5.45 In, 5.70 Out Made $13…..Woo Hoo!!!”
Profit.ly user tdtrader: “$OCGN in@ 1.81 out@ 2.00 7.14%.”
And Profit.ly user forcesteeler: “Sold 2000 shares GHSI quick $300.”
Here’s a nice trade from Profit.ly user Vetdealer: “Got my fill $LVCA 19% profit for $540 Yes!”
What about this awesome trade by Profit.ly user PolishGuy: “Covered 6k shares of $LCI for almost 3k profit.”
And I really love this one from Profit.ly user dani_jeane: “In $COWPP @ .078 out at .1594 100+ percent profit!!”
Congratulations, dani_jeane! Nice.
Big things have small beginnings….
@ScoutPfft made his first OTC trade on October 10:
Did my first otc trade according to @timothysykes strategy. Traded 857 shares of $CLTH at the market open. In at $0.0438 out at $.0566 for a 29% gain. Starting small and made $10.84. Still learning and going for singles not home runs. Thank you @timothysykes
And here’s what Twitter user @ScenicSplendor says about “The Complete Penny Stock Course”:
Love the organization of all the basics in this book! Definitely helpful for beginners and those looking to start studying!! Highly recommend 🙂
How about new Trading Challenge student @AdamYaretz working hard to grow his knowledge account:
Loving the timing of these lists! Seem to get mine done just before the email drops, having your thoughts and market outlook to compare to is very helpful! 1 week in and growing that knowledge account everyday! #millionairemindset #challengestudent #nodaysoff pic.twitter.com/2bNhujBaQ1
[Please note these results are not typical. These traders have exceptional knowledge and skills that they’ve developed with time and dedication. Most traders lose money. Trading is risky. Do your due diligence and never risk more than you can afford.]
What do you think about penny stock hold and hopers? Comment below, I love to hear from all my readers!