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Penny Stock Alerts

If you spend any time researching companies that you’re thinking of trading stock in, I’m sure you’ve seen the advertisements, the pop-up windows and the e-mails informing you of different websites that will give you alerts on penny stocks they believe will make you some great gains.

The only problem that I see with that is you really don’t know the person who is running the website. Quite a few of them are actually fund managers that use you to help pump up the price of the stock to help them make more money. Of course I’m not saying that all of them are like that but you need to be aware of who you might be dealing with.

I myself subscribe to many different alerts from websites just to see what’s going on. In many cases I watch their picks to see if they’re going to be right or wrong. Unfortunately many of the picks don’t really go anywhere after the initial jump. How I see it, many of these website/traders position themselves in a company, start hyping it up and tell their readers/subscribers that it will do great for them. As the price goes up they start scaling out their position. Most of the stocks that I’ve been watching over the last two months from these alerts would have lost me thousands of dollars. Don’t get me wrong, I would have made money on some of the picks, but not as much as I would have lost.

The latest stock that I’ve seen being pushed is Biocentric Energy Holdings (OTC:BEHL.PK). I saw this being pushed by several different websites. I figured that this too would be another pump-and-dump fiasco as I’ve seen before. I even saw some talk on a penny stock forum of how this is being pushed. The stock price was $0.023 per share when I first received the alert, after three positive days where it went to $0.07 I was waiting for the price to fall. To my surprise, it still hasn’t started to lose momentum. As of this morning, the price per share was to to $0.14, a gain of over 500% in just a week or so. If you were one of the many that jumped into this investment, you need to get out now. I’m telling you that this will not be in the category of “best penny stocks 2010”. The company doesn’t have anything really going on to sustain the gain in price.

I’ve talked about it before and said that buying penny stocks can be very rewarding, but at the same time you can lose a ton of money. Be careful when you trade penny stocks, even more so than you would with bigger cap companies.

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The Stock Market Is Getting Ready For Another Run ...

Here we are again going through another correction in the markets. The three indicies have dropped over the past week off their seven month high and I’m not surprised. Over the last three months the markets have been on a tear coming off their lows. I mentioned before about how the markets wouldn’t be able to continue these gains without some sort of correction and profit taking.
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Even though I’ve been waiting for this pull back for some time, I did expect it. I will say that the markets aren’t as weak as I thought. I no longer expect to see the DOW reach 7000 again. As a matter of fact I don’t think it will get below 7800.
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The word on the street is that there is a large amount of money sitting on the sidelines waiting to jump back in, which means that once investors and traders feel that the waters a safe enough to come back in, it will help the markets rebound even more. Yesterday I heard that many of the hedge fund managers are already invested in and that they don’t have much capital not isn’t in the markets. The report stated that they are concerned that they may miss the next surge in the markets and they don’t want to be caught sitting it out.
If that’s the case, it can also be said that if they get skittish and pull their money out to avoid another big loss, we will see the 7800 level on the DOW.
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I don’t think so on the latter issue because the housing market is showing signs of stabilization, as well as the financial sector. Jim Cramer last night even had a segment in regards to the housing bottom. Since last August he has been saying that the housing bottom would be around June 30th of this year. Well, he ripped the board down and said that after yesterday’s housing number were the third straight month that they have improved. Other indicators are looking good too.
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With that in mind, I will start building positions in the stocks that I’ve been watching for sometime. Over the next two weeks, I will be looking at Apple, JP Morgan, Research In Motion and Agnico Eagle Mines. Of course there are others that I do like, but I would want more of a pull back before jumping on board with them.
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If you’re looking to take advantage of some free advice from Jim Cramer (besides his TV show), Check out his Action Alerts program that he’s always mentioning on his show. I’ve been a member for over a year and find some sound information from him, along with some great picks. Follow the link for a two week free trial of his Action Alerts subscription.
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TheStreet.com 120x120 Free Trial

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Safe Investments

Now a days it’s really hard to find any decent safe investments. The old buy and hold routine doesn’t work in these trouble times, and as for trying to day trade, you’re taking your hard earned money in your own hands.
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A safe Investment right now seems to be in CD’s, bonds and Treasury bonds, but the problem there is that the return is quite low. After having your portfolio, need it be a discretionary one or your 401K/IRA, beaten up as bad as it has in the last year. Some may not want to deal with a 3% return on their money and have it tied up for nine months or longer to get it.
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High yield safe investments like junk bonds aren’t any better. They involve alot of risk and again after what we’ve gone through, do you really need more risk?
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The only safe investment advice that I would be comfortable giving you is to do your research into strong companies (of course you won’t know they’re strong until after the research) that have been beaten up because of the market as a whole brought the price down.
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One company that has taken a beaten because of the hedge fund redemption is Quanta Services Inc. (NYSE:PWR). The company has a great balance sheet and has orders out until 2010. They are expecting great numbers in this quarter. Thursday the stock hit a new 52-week low at $12.27. A level that hasn’t been seen since February of 2006.
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I don’t consider too many stocks to be a safe investment the way the markets have been moving. Monday morning the DOW opened at 9,141.01 and the intra-day low on Thursday was 7,979.60, but then closed Thursday at 8,835.25.
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The safest investment right now might be not investing.

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Hedge Funds Part Duex

Today five of the most powerful men in the hedge fund world are in Washington speaking to the Oversight committee. The were invited (told) to testify in Washington to the effect that hedge funds had in the economic crisis that is upon us now.
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George Soros Of Soros Fund Management, John Paulson of Paulson & co., Jim Simons of Renaissance Technologies along with Citadel Investment Group’s founder Ken Griffin appeared in front of Committee Chairman Henry Waxman.
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Ironically they agree that there needs to be more transparency from the industry of secretive funds. They also gave different views on whether or not they contributed th the financial crisis. George Soros di say that hedge funds were part of the reason for the financial bubble. Mr Soros wrote in a statement “A deep recession is now inevitable and the possibility of a depression cannot be ruled out,” sent to the Oversight and Government Reform Committee hearing.
This is the ma who is know for betting against the British pound back in 1992 and recently backing Senator Barack Hussein Obama for President.
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The Committee wants to hear from the leaders in the hedge fund industry about the role of these funds as well as their tax status and regulation. Oddly enough when the financial and economic world was falling apart, these gentlemen made on average $1 billion last year. That is also why they were called to appear in Washington.
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“Currently, hedge funds are virtually unregulated,” Waxman said. “They are not required to report information on their holdings, their leverage, or their strategies. Regulators aren’t even certain how many hedge funds exist or how much money they control.”
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I don’t know about you but this is quite fishy. Why is it that these guys can do what they do and not have to be accountable for their actions? Yes I know that many of them are operated outside of the United States, but they trade in U.S. currency and it’s assets.
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I also know that they are not the only reason for the collapse of the financial industry. Most of that blame does have to fall on the managers of those institutions, rating agencies, investment banks as well as the people who over-extended themselves with credit.
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As to the regulations that were non-existing for the last several years. Most of that blame must be put on Congress, the Treasury Dept. and the Federal Reserve. It’s their job to keep things in order. Unfortunately, many of those politicians were re-elected. Barney Frank, Henry Dodds along with Obama who was able to deflect most of the blame during the election. We will have to wait until 2010 before we have a chance to remove some of these lazy, elected government officials.
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David Ruder, a former chairman of the U.S. Securities and Exchange Commission tried a few years ago to force the hedge funds to register with the agency, but failed was also present at the hearing.
“Although hedge funds have been active participants in the financial markets during the past years, they do not seem to have played a major role in the events precipitating the crisis,” Ruder told the hearing.
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The men who were summoned to the hearing today are some of the leaders in the hedge fund industry. These guys are known by playing by the rules. The bad thing is that there aren’t that many rules for them to follow. Many of the hedge funds that we’ve been hearing about going under are the less respectable ones. The ones that don’t really follow any rules and leveraged the hell out of their funds.

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Patience And Timing Are Everything

Today the latest retail numbers were released and I’m sure most of you (if not all) weren’t surprised. Let’s be for real, the economy is in the crapper and to expect any retailer (except Walmart of course)to post good numbers in this quarter or even the next.
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The results were devastating and to make matters worse, the rumor out today was that there are more hedge funds redemptions. This is just a continued de-leveraging of the markets. Unfortunately no one really knows how many more hedge funds are going to drag down the stock market. This type of roller-coaster ride is far from over.
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Expect that each time the markets make up some good ground like they did in the last two weeks, hedge funds will take profits and dump their positions. So my advice to my readers are to do the same. In this type of volatility, anyone invested in the markets need to be more of a trader than a investor. Take caution and profit where you can and hold on to a good portion of capitol on the side for when days like this take place.
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There quite a few companies that their stocks have taken a beaten. If you are prepared with capitol, you can pick up some shares at a great discount. As a matter of fact there are too many that fall into this category. Too bad that it would take me about a month to list them.
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I’m sure many of my readers have their selection of stocks that they favor which have dropped in share price, so take your time and if you do get caught in the red, be patient and leave your emotions at the door.

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Hedge Funds In Trouble

It’s been rough for hedge funds in the first three quarters of this year. After the average hedge fund lost close to 5% in the first eight months and then to lose another 7% for the month of September alone (according to hedge fund research), It become deadly for many of them in the first week of October.
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At the end of last month, many funds were expecting more than the usual level of requests from their clients/investors to pull cash out. which makes it hard to work on their longer-term trades when they stand the chance of losing capitol to do so. In turn hurting other investors in the fund. The number one reason hedge fund managers have guidelines in getting withdrawals.
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Unless you’ve been living under a rock, you’ve now heard in the last week that many of these hedge funds are in emergency status trying to raise capitol for their clients that want to pull out their money. In the process they’re running in the negative zone. To make matters worse, hedge funds bolster their returns with lots of borrowed money, which makes it harder for them to do what they do best.
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These firms make up a good percentage of why we’ve seen the decline in prices in the last few days. As a matter of fact, if you were watching Quantas Services Inc. (NYSE:PWR) on Tuesday, you would have seen a spike sell volume of almost 4 million shares in a one minute time frame. It’s believed that that trade was a hedge fund liquidating assets.
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Some funds are also trapped in the Lehman Brothers London Unit, which is now a thing of the past. The volatility in the markets has been accelerated by the failures in the financial sector like Lehman Brothers, AIG and Wachovia bank. Let’s not forget to debacle that went on in Congress recently.
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It’s getting harder for hedge funds to make positive gains. Yes, there are some that have had some good returns this year, but they’re getting few and far between. Most of them are down and could start seeing the writing on the wall of their impending doom. With all that is going on in the industry, there will be less firms out there. Of course the big dogs will survive to fight again, but how much capitol will they be able to raise to invest with is another question.

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Stock Market Rollercoaster Ride

Today’s volatility in the stock market has been nothing but a joke for the small traders. The DOW opened at the start of the day being up over 300 points. All that meant for the average trader was that you missed the spike in the financial sector as well as most of the rest of the market. At the time of me writing this post the DOW is only up 110 points which show that the smart money is now moving out of the financials to some extent.

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The financial sector opened up higher than the close on Friday, but every stock has come down quite a bit since the opening of the market. If you were one of the many people who thought that the rise in stocks would continued and jump in this morning, you’re down big time at this point. The only way that you could have made any money today in the financial area of the market would have been if you bought last week and sold first thing this morning. All the smart money got in early before the open and a lot has been removed since then. This is one of the many reasons that I normally stay away from this sector.

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Trading stocks in this market is not for the average joe and today’s trading is proof of that. I don’t know at this time how much of this sector has been shorted, but I’m sure it’s more than normal. The DOW sitting at 11330 seems to be the level that we seem to be coming back to after a few days of climbing.

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I did get back into many of the stocks that I sold out of last month and since getting back in I’m down about 4%-6%. I’m still holding off on going all in at this point because of the volatility.

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Hedge Fund Mayhem

It was reported yesterday that the drop in the commodity sectors was because of rumors of hedge funds liquidating assets in those areas. It basically tells me that this sell off was un-called for like I stated the other day.
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Again the market took another hit in the morning hours with commodities leading the way. All day on CNBC, they stated that it was possibly because of hedge fund managers. I myself don’t know too much about the hedge funds nor do I follow them. Hedge funds managers typically do short-selling to hedge against losses in the market. The members of hedge funds are the very wealthy and people like us would never qualify to be involved in a fund like this and to me it sounds too risky.
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I would like to explain hedge funds with my readers, but I don’t know where to start, so I went on Wikipedia to get a better idea of how to explain it to you, but after reading different sites I’m more confused than I was before I reading them.
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Investopedia is a site that I follow on my feed and enjoy reading it daily. Their description of a hedge fund is a little easier to understand. If you feel like having your head spin please feel free to read the explanation (good luck).
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What ever the reason for the sell off, I’m taking advantage of the share price of a few different stocks. Stocks like Freeport McMoran (FCX) have great fundamentals and are way down after dropping over 15% in the last two days. When I sold off my shares of FCX about two weeks ago when it was in the low $90 range. A week and a half ago it was near $94. Today it hit a low of $78.40 before it gained a little strength and closed at $80.36.
I don’t know if there will be more of a sell off in this company , but I took a bite at $79 and expect to see this stock back in the $90’s again real soon.
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Whatever you decide to do, do your homework and due diligence before you take action
Happy trading.

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