Your Questions About How To Pick Stocks

John asks…

Next week will be my first in the stock market…any tips?

the stocks i plan to invest in are peix..cur…pphm…or biof…i know that the lower end stocks are more volatile but i like it that way…also…what type of stock chart should i use…any suggestions?…brokerages? and do stock charts that have the buy and sell alerts really work?

John answers:

> the stocks i plan to invest in are peix..cur…pphm…or biof…
> i know that the lower end stocks are more volatile but i like it that way…

Ok. I see that you have picked stocks that have started running up.
Just be careful, don’t bet too much money on these stocks.
Only invest as much as you can afford to lose!
If you obey this one rule, you’ll survive.

> also…what type of stock chart should i use…any suggestions?…

You should use simple logarithmic charts like these:

> brokerages?

I use Scottrade. I think, it’s the best out there.

> and do stock charts that have the buy and sell alerts really work?

Stock charts themselves do not have any kind of alert. There are expensive
softwares that can give you buy and sell alerts. Other than that, a stock chart
is just a stock chart. If you know what to look for, then you can see the
signals with your eyes. If you don’t know what to look for, then you don’t know.
To find out how to interpret stock charts, there are many books out there.
It would be too long to explain here all the signals, and I won’t even try.

But one must not be a stock chart expert to see that the stocks you have chosen
are too high. Look at the first one, for example. PPHM — in its entire history there were only 9 violent swings like the one recently. During these upswings, the price jumped between 200 and 400% up. PPHM started to go up recently, and it’s already up 900%. Don’t you think this is a little bit too much too quickly? I wouldn’t touch this stock with a 10-foot pole.

Let’s look at the next one — CUR. In its entire history, this stock had 2 vertical upswings. The first time it was up 200%, and it crashed just as fast as it went up. The second time it went up 400%, and that’s where it is right now. I wouldn’t buy it here.

The last one BIOF is another one that is prone to have upswings. It has had 5 vertical upswings in its history, and each time it gradually descended after these runups. Generally, it went up 200-400% each time. It’s already up 230% as of now. So, you want to buy it here? Common Sense would dictate that you should buy this stock before it runs up maybe a year from now. I am not trying to deter you from making your investments now, but I am just telling you what I would do. I would not buy these stocks.

I have a friend whose co-worker bought some penny stock and made a killing. Hearing this awesome story, my friend invested his 30K into this penny stock and lost all of it. The problem was he bought the penny stock AFTER the other guy SOLD and made a bunch of money on it. And usually if you buy a penny stock AFTER it goes up, then guess what. You’re going to be stuck in it for a ride DOWN.

I guess an even bigger mistake was that he invested all of the money. I think, 30,000 dollars for a penny stock is a little bit too much, especially if that’s all you got. One stupid mistake like that can hurt you for a lifetime. So, keep your sanity with you at all times! :-))

Carol asks…

stock picking?

what is good stock to buy and what price should you buy and sell the stock?

John answers:

If you feel like doing a little reading…IBD ( Investors’ Business Daily) has a twenty point stock selecting process and also charts and lists to help you find stocks on the move.
Some fairly decent info… Usually on about the last page of the first section.

Sandy asks…

do any of those “stock picking services” actually work?

we all know its pretty hard to make money in the stock market unless you have an “inside line” on some info (which is illegal, and why Martha Stewart went to prison, so I’d rather not do that) I read about some service or soemthing that will pick it for you. it says they have financial market experts and analytical software that can predict the best stocks to buy the vast majority of the time… Has anyone used some of these, and do any of them work?

John answers:

I think you’re referring to “analytical market software.” There are endless products/services out there like that. Some of them are legitimate and work very well, but a lot of them are scams.

One of the “scammiest” is the over-hyped Penny Stock Egghead service. It was recently revealed to be a pump-and-dump scam (a small group of people buy some shares in a stock, then artificially drive up the price and sell their shares. In this case, they drove up the price of the shares by advising the subscribers to buy it all at once, making it appear to be high in demand. Of course, the subscribers who bought it lost their money when the price fell, but by that time, the operators of this scam had already sold theirs and made bank from it.)

One that actually does work is called Daily Market Advantage. I used to use it when I was more active in trading. Nowadays I focus more on stocks with high dividends and long-term investment potential. And so I don’t bother with speculation and day-trading, but Daily Market Advantage is great if you plan on using that kind of trading style. What I like about it is that it doesn’t just pick stocks for you, it actually teaches you to read the subtle hints of the market, and learn to make these decisions yourself. I found a review of it that sums up my experience pretty well; check it out if you’re interested:

Donald asks…

Anyone have any good stock picks?

I currently own few hunder shares of SIRI and Crxx and about 100 amd shares. “I started investing last week” I plan to buy bp and intel next. Its there anyother otc or shares under 10 I should look at??

John answers:

I really like the profitability and resistance to the recession of these companies: U.S. Bancorp (USB)-they passed the stress tests with flying colors and didn’t volunteer to take tarp money (they were forced to)

and MP2 Technologies (MPTO) is a really cool company that is SUPER cheap right now (0.12 as of Map 18 close) and have had some good news out and seem to be able to be very profitable in the future. There was a pullback today which seems like it might be a great chance to get in, I have a buy order in right now actually to pick some up tomorrow AM). GREAT penny stock for long term or short term.

I also like MGM, there was just a big stock offering and the stocks plummeted about 35% in a few days because people were scared of the dilution, but had some great gains today and is going to keep bouncing back up. Plus, once the country starts coming out of the recession, people with extra money are obviously going to be spending it in Vegas again 🙂

Mary asks…

An honest website for penny stock picks?

Looking for an honest website for penny stock picks…somewhere I can learn and get really good picks. Please let me know what you recommend thanks!

John answers:

You are not going to like this answer, but an honest website would tell you not to invest in penny stocks at all.

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