PennyStocks.com

MoneyJuggler

I signed up for PennyStocks.com newsletter (naively) as I've never invested in shares before, and it looked (at first) like a low cost way to get a feel for things,but have since registered for a practice a/c at Share.com, much better .

However I still get their emails, and their current "pump & dump" tip is xuii (xumani).

I'm not going to get involved, as all seems a bit too erm "risky" for me, but a question for those with more experience - the price of these shares is yo-yo ing wildly by the day - would it be possible for someone to just buy one day, and short sell the next day, and make quite a high return (assuming they bought low, sold high- I can see the risks, but wondered if there were any rules stopping that happening, or if I've completely missed something?

I understand that is the basis of the stock market, but I don't know how instant sales and purchases are, if there is a clearing process or something?

Thanks for any answers, as I say, am complete novice, and appreciate this probably comes across as a dumb question to those with more experience!

Totton

Check your broker for the T+ date which tells you how many days before the trade is settled. (http://en.wikipedia.org/wiki/T%2B3)

Usually your broker will let you trade using money from a sale although the monies will not necessarily be in your account at that time. I use HL and for me the money is available for me to use immediately following a sale.

sabretoothtigger

low cost way

The cheapest shares are the most costly and highest risk most of the time.

If you buy a share for 10p and it sells for 9p then your cost was 10%. If RBS can be got 300p and sold for 299p then that is cheaper and to generalise big stocks are often far easier to own or trade. Market Cap

So look at ratios not just one price is best advice and basically shares sales are instant in effect, that part is ok to simplify

srcandas

To be fair OP comparing penny shares with Share.com is like comparing a visit to Ladbrookes with a cash ISA

I find Penny shares great fun and very entertaining but then I also bet on my beloved Watford football team. But neither has anything to do with my investment strategy

Your chosen strategy and thus method (and in particular whether costs and speed of trading are very important) will depend to a large degree on what profit levels you seek and how quickly you would hope to achieve them.

Do you for example envisage doubling your money in x years?

:beer:

warehouse

srcandas wrote: »

I also bet on my beloved Watford football team.

LOL, as do I. They should make us some nice returns this season :beer:.

MoneyJuggler

srcandas wrote: »

To be fair OP comparing penny shares with Share.com is like comparing a visit to Ladbrookes with a cash ISA

I find Penny shares great fun and very entertaining but then I also bet on my beloved Watford football team. But neither has anything to do with my investment strategy

Your chosen strategy and thus method (and in particular whether costs and speed of trading are very important) will depend to a large degree on what profit levels you seek and how quickly you would hope to achieve them.

Do you for example envisage doubling your money in x years?

:beer:

Thanks for that, and putting it in terms I can understand! I'm going to keep on with the practice a/c for a few months, and try and read as much info as possible, I was just wondering if one was brave/crazy enough to plough in and out of the penny shares over a short period of say a few days, whether doubling one's money would be possible, or if I was missing something from a regulatory/system point of view.

The shares pennystocks.com are pushing atm for example were 14p a month ago, and yesterday 38p , so what's stopping people getting in and out quickly?(Not saying they should, just a genuine question as I am thinking I must be missing something!)

I personally wouldn't as they are so volatile - is that the main reason for more experienced investors?

Thanks again.:T

srcandas

MoneyJuggler wrote: »

The shares pennystocks.com are pushing atm for example were 14p a month ago, and yesterday 38p , so what's stopping people getting in and out quickly?(Not saying they should, just a genuine question as I am thinking I must be missing something!)

What is missing is that for every winner there are many more losers.

Of course Penny shares promote the winners but take 10 penny shares. In a virtual portfolio buy £1000 of each. After a month have a look.

And remember as Sabre says there are spreads of price - the difference between the buy and sell price. They can mean you need a doubling of price just to get even.

Seriously have a go with a virtual portfolio at trustnet or somewhere similar and see how you get on. It can be fun and certainly very informative

IronWolf

There is nothing inherently wrong with penny shares, in fact one of my biggest portfolio holdings is in one.

But I would say they are only for a more experienced investor, as the prices are open to manipulation, people can and do deliberately swing the prices to lure in inexperienced investors.

You also have the problems of pump and dump, where a promoter will buy the shares, send out emails promoting it. Even a few people buying can then drive up the price at which point the promotor dumps it.

Only buy a penny share if you know exactly what it is you are buying, and believe the company is selling at a good price. Do not buy because the price moves a lot or because it was tipped.

MoneyJuggler

Again, apologies as a layman for posting this, but I've been watching these "penny shares" that have been pumped by lots of newsletters, in a company calle Xumanii, and in the last week they have nearly tripled in price. I can't find any information on why, either - are they just being hyped up, or am I missing a reason why they have shot up?

Other stocks I have watched have moved up and down in much narrower margins over a few months, but larger movement seem linked to publication of a report, or forecast, or something!

Thanks for any pointers, am just baffled!

bowlhead99

As Ironwolf says, penny shares, particularly those that don't even have a full stock market listing on LSE, AIM, NYSE, NASDAQ, AMEX etc are best avoided as they are very prone to manipulation. If they are merely quoted on the over-the-counter bulletin board (OTCBB) and in the OTC Pink Sheets, they likely don't have the minimum market cap, minimum share price, or meet the corporate governance or other requirements to be properly quoted on a regulated exchange.

If the company is tightly held by a few insiders and other investors, only valued at $10m rather than $100bn, and only has 100 million shares issued at one cent each and someone sends round an email chain saying BUY THIS HOT STOCK NOW, it only takes a few thousand people new to the market to make it go through the roof, temporarily.

In the case of XUII it was a cash shell which has recently become active. They are not UK listed so if you are looking for RNS announcements on your UK stock exchange news feeds you won't find anything. Five seconds of searching in the right place gave me these links from the last fortnight

Xumanii(R) Files US Patent Application for System, Method and Device for Live Stream Editing
Xumanii(R) Merges Into Its Wholly Owned Subsidiary Xumanii International Holdings Corp(TM)

So, patents, corporate actions and commencement of operations in a new structure. Of course there will be valuation movements. You don't have enough information to even make a guesstimate as to whether the business is worth $50m or $500m or its current $200m.

You would be better buying a book on blackjack or poker and going to a casino with your £500. By minimising your losses to the casino through bad play, you might make ten times your money or you might lose it all. I have done both in my time. But at least you would have some sort of feeling that you had a clue why you won or lost. I have had similar stock market gains and losses but while I like to think it was my awesome insight, some of it was just being in the right place at the right or wrong time.

The people writing about such stocks make more money from their careers as authors than they do from investing in stocks which apparently keep 10-bagging. That tells you that the tips aren't generally reliable as they would like to admit. Or it tells you they are really desperate to drum up interest in the stocks they own themselves, and you can bet they will get out before they tell you to do the same.

Or it tells you they are all billionaire philanthropists who no longer need the money and love to share their insight. I don't see Warren Buffet or Bill Gates writing tip sheets for a living, so that's probably not the answer.

IronWolf

Because of the low liquidity it only takes a few buyers to move the price of these shares. I'd be more likely to short one of these pump n dump shares after its run up than buy it