timothy sykes logo

Promoters- Tim Sykes Penny Stock Trader

The Wolf of Wall Street & I Talk Promoters

Timothy SykesAvatar
Written by Timothy Sykes
Updated 9/19/2022 6 min read

I bought shares of a company after the FBI raided their headquarters.

That kind of surprised Jordan Belfort, AKA The Wolf of Wall Street.

I recently joined him on his podcast Wolf’s Den, for an hour-long discussion on all things trading.

This was his reaction…

As we talked, it became clear that although times change, promoters and their dirty tricks remain the same.

Belfort appreciated how I crafted a strategy to exploit promoters and now teach my students to do the same.

He gets that there are plenty of scams, and most of these stocks probably won’t exist ten years from now.

But as our conversation continued, he and I both covered critical insights into the inner workings of promoters…

Concepts I want you to know whether you use them to craft a strategy that exploits promoters or simply helps you avoid getting tangled in their nets.

Promoters Don’t Want the Stock to Crash

how robinhood works
© Millionaire Media, LLC

For those of you who don’t know, Jordan Belfort was on the wrong side of promoters and admits as much.

The movie The Wolf of Wall Street is a semi-biographical film about his rise and fall on Wall Street.

Today, he is a motivational speaker, salesperson, and entrepreneur.

Back when Belfort was still on Wall Street, promoters worried about their stocks crashing.

A quick move would bring more scrutiny and cause people to realize it’s a scam.

As he pointed out, if a stock traded at $10 and belonged at $2, promoters had a choice – let the stock crash or try and prop it up.

Using Nikola Motors (NKLA) as an example, I explained how promoters like to create a ‘soft landing’ for shares.

They tell people the drop is nothing to worry about, that everything is fine. Just look at former Nikola Motors CEO Trever Milton for countless examples.

By ginning up interest in the stock, they do what Jordan Belfort said, try to keep the house of cards from collapsing.

That’s a big reason why my dip-buying strategy is so effective.

When a stock plummets 30%, 40%, 50%, or more, promoters start to get scared and active on social media. They’ll dump press releases about nothing just to get people interested in the company.

This creates huge bounces I incorporate into my 7-step penny stock framework.

Even if you aren’t interested in buying the stock for a bounce, it’s important to realize one thing…

Large rebounds don’t justify huge runs.

When many penny stocks bounce back, it isn’t because people finally see value. It’s because promoters duped people into snapping up shares.

I’m a History Teacher

© Millionaire Media, LLC

Those who fail to learn from history are doomed to repeat it.

Markets have short memories.

While I wish I could say that speculative bubbles happen occasionally, I see them happen regularly.

Some are massive and last for months, if not years, like cannabis or cryptocurrencies.

This isn’t to say they aren’t tradeable or won’t be a real business in the future.

But when their beginnings are covered with promoters jawboning assets and creating Supernovas, it creates unsustainable price action.

What changes is how the promoters reach us.

A decade ago, it was all about emails and newsletters.

Before our StocksToTrade Breaking News Chat, my top students would hold webinars to explain how to optimize your Gmail, so you got promoter emails faster.

They had a list of dozens of Twitter accounts to follow.

Back in Beflort’s day, it was done over the phone.

The mediums promoters use to reach us have changed. But their goals remained the same.

However, some developments materially change the game.

For example, several years ago, I stopped shorting penny stocks.

As penny stock trading grew, more brokers opened intent on feeding short sellers, overcrowding the space.

That led to extraordinary price movements, as we saw recently with AMTD Digital Inc. (NYSE: HKD) where the stock shot up thousands of percentage points.

Sure, you can still make money on the short side. But one bad trade can wipe you out.

As I discussed in the interview, short selling got me into tiffs with Justin Beiber and Shaq when they promoted penny stocks.

Expect The Worst

© Millionaire Media, LLC

I learned the hard way that you can be 100% right on an idea and still get it dead wrong.

There are terrible companies that trade over $100 per share.

Heck, some of them have been in business for decades.

We saw storied financial institutions flounder during the Great Recession.

Zoom Video Communications Inc. (NASDAQ: ZM) went from $100 a share to almost $600 during the pandemic as people clamored for their software.

Today, it trades below $80 with even more subscribers than they had during lockdowns.

The only thing that matters for any stock is price action.

People thought their 5,000-square-foot mansions were worth $3 million in 2007.

Two years later, those same homes sold for less than a million in short sales.

Whether you’re talking about a stock, crypto, a house, or even a chair doesn’t matter.

The only thing that matters is the price someone is willing to pay.


How much has this post helped you?

Leave a reply

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

* 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 (888) 878-3621 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”