Penny Stocks, Bulls, Bears and Promoters

Unless you've been living under a rock, you've no doubt noticed the action taking place in the penny stocks sector. There are a few things to take particular note of:

• The action isn't discriminating against any penny stock company or favoring any penny stock sector
• Its happening during what some call the beginning of a bull market
• Its happening during what some are calling a bull rally in a bear market
  

What this tells me, and what it should tell you, is that money doesn't discriminate among penny stocks. So the big question in your mind should be what makes some penny stocks move, and others not?

It's not the charts; every penny stock has a different chart...and a different capitalization structure. Every company, if it wants to can tell a compelling story. Most of these penny stocks are similar in terms of their income statements and balance sheets.

Vive La Difference!

So what is the elusive difference? Simple: penny stock promotion. While some companies out there is trying to figure out whether we're in a bull market, or a bear market, penny stock companies that have employed a good stock promoter are increasing their valuations; it doesn't matter if its a bull market or a bear market or a bull rally in a bear market. The right stock promoter will always be able to work within the confines of a free economy.

So Does the Promoter Matter?

Absolutely. The reason I keep mentioning the right "stock promoter" is because the wrong one can completely destroy a company. Its been proven in the past that SPAM does work. - for the spammers. These days, most often, once a stock is spammed, pinksheets puts out a skull and crossbones on the stock and large online brokerages like Ameritrade, Etrade, Scotttrade and Schwab will not allow online trading in the stock. So the company hiring the wrong promoter really does suffer.

Where's the Advantage?

Unless you've been investing in penny stocks for a long time and know the game, its hard to tell the players without a programme. You could sign up for anyone of a multitude of free penny stock pick sites, but generally you'll get what you pay for. These companies are paid to tout stocks having done almost no research, and without even looking at management.
Or you could subscribe to a site that doesn't take any compensation from the companies it profiles. The site, www.pennystockjockey.com takes no compensation from any company we profile. Further, if the company profiled has a market cap large enough (generally anything over $20 million) we'll pay for an independent CFA report to justify our own conclusions. And ofcourse, the whole premise behind the company is that WE KNOW THE PROMOTER behind the deal. We will never recommend a company that isn't interested in promoting its stock, and we're not interested in profiling a company not willing to hire the right type of promotional services.