Today I am writing about penny stocks. A penny stock is any security that trades under $5.00 per share.
I have a stock in my portfolio that qualifies as a penny stock, but it didn’t start as one. This stock ticker symbol is TNGNQ. They were in the business of figuring out how to make bladders with 3D printers. Long story short, I invested about $2000 at about 30 dollars per share in 2011, and now it is sitting at three cents a share. My only 100 percent loss!
Currently, companies have successfully printed bladders, as illustrated in the article on the 3dprinting website titled Bladder grown from 3D bioprinted tissue continues to function after 14 years.[1]
So what happened?
When I invested in TNGNQ, I looked at the balance sheet and saw that the company doesn’t work out financially. They were operating at a loss, and they had just acquired 10 million dollars from a public offering. I could tell it all was not going to work out. But I invested in it anyway. I liked the idea of 3D printing of bladders. If it worked out, it would solve a huge problem for the organ shortage in the world. But the financial numbers said the company was not going to be around for long.
And so now it is at three cents a share. I will never get rid of the stock. It is my reminder of what I did and to not do it again.
But today, I am writing about penny stocks with the hopes of getting my friends together in a group to invest in penny stocks. It’s not a competition but more of a learning experience.
The investing fun is also the perfect opportunity for me to try a trading idea I came up with when writing my book Stock Market Masters. Long story short, I did some stock market modeling and uncovered something amazing, but I did not believe the results because if true, I would own a small country in about a year. I deleted it from the book. I reasoned that there must be something wrong with my models and analysis. A model in the ThinkOrSwim platform said it was wrong. But another model I worked with showed promise.
Anyway, I’m going to try it on penny stocks.
When investigating penny stocks today, I found the warrior trading website ranking high on my google search for penny stocks. Ross, the author of the page, made a million dollars in two years trading penny stocks.[2]
“Trading Penny Stocks turned me into a self-made millionaire. In January 2017, I decided to start over. I began with $583 in my account, and as of May 2019, I broke the $1 million mark in profits!”
The site later on points out that only 10 percent make money trading penny stocks, “at the end of the day, only 10% of active traders in the market will be profitable.”[3]
And so there you go. The 2 million dollars in 2 years is a result that is not typical.
The site has a penny stock trading guide for beginners.[4] According to the website, there are four tiers of penny stocks.
Tier 1: stocks are those between 5 dollars and 99 cents. Thes stocks trade in increments of a penny and are on the NASDAQ and NYSE.
Tier 2: stocks are those between 1 cent and 99 cents. These stocks trade at fractions of a penny.
Tier 3: stocks are below 1 cent a share. TNGNQ is in this tier.
Tier 4: Tripple zero stocks are from 0.0001 to 0.0009 dollars.
Ross discusses a strategy for picking the penny stocks on the site as well, and he has screeners to help him identify which ones to choose. The site is, of course, selling a product, but I will not be buying it since I have my strategy to try.
Well, that’s all for now,
See you in the next blog,
Dr. Paul Keller
The Financial Master Series Books
The Beginner’s Guide to Rental Property Investing
References:
[1] Bladder Works After 14 Years
[2] https://www.warriortrading.com/penny-stocks/
[3] https://www.warriortrading.com/penny-stocks/
[4] https://www.warriortrading.com/penny-stocks/
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source https://drpaulkeller.com/penny-stock-millionaire-1/
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