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singaporegal Supreme	28-Jul-2008 21:42        singaporegal About Contact  Quote this Post! Style: Technical   Mood: Yells: "Female TA nut"
x 0   x 0  Alert Admin	If you're predominantly a TA practitioner, you should stay away from penny stocks unless there is a good fundamental FA reason to go long on it. Penny stocks can be really volatile and this makes the charts really hard to do trend-analysis. Those whose volumes are really low are particularly problematic.   Having said that, if you are predominantly an FA person and intend to hold the stock for the long term, then the arguments above do not matter so much. However, you need to be prepared to endure long periods of draw downs.
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SupremeA Veteran	28-Jul-2008 00:26        SupremeA About Contact  Quote this Post!
x 0   x 0  Alert Admin	Remember the legend of Creative
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chinton86 Veteran	28-Jul-2008 00:20        chinton86 About Contact  Quote this Post!
x 0   x 0  Alert Admin	yupz...Agreeable that ot all penny stock are worst than a blue-chip stock. Firstly, how u define blue-chip and penny stock? By what people say? i feel that different people had different catogariszation. Exaple of a good Penny stock is S'pore Ship, although its only 40cents, the dividends u gain had already make it like a Blue-Chip stock!
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elfinchilde Elite	27-Jul-2008 22:10        elfinchilde About Contact  Quote this Post!
x 0   x 0  Alert Admin	yea. concur with livermore. perhaps the distinction should not be between "blue chip" and "penny stock" but between speculative stocks, and good fundamental stocks. (keeping in mind that at times, the line can cross). look at cosco for instance. it can be considered a blue chip, but it still died post '07. meanwhile, there are some pennies that are still doing swimmingly. "cheap" should perhaps be considered relative to fundamental criteria, rather than price per se. If for instance i told you a stock's NAV is $2, and it's 1.5 now. compared to a penny whose NAV is 1c, but price is 20c. Which is 'cheap'? n00bs need to learn that. as the saying goes, "the market is an expensive place to find yourself."
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Livermore Master	27-Jul-2008 21:58        Livermore About Contact  Quote this Post!
x 0   x 0  Alert Admin	It is unfortunate that Jessica incurred a loss. Actually to a certain extent, incurring a loss is good as long as you don't suffer a substantial loss where it would be hard to recover.   Almost every great investor or trader suffers a loss. They become good after a few hard lessons learnt along the way. It is very unlikely someone can become good without making some mistakes. You gradually "close up" the gaps as you make mistakes. Some "close up" the gaps faster but some take a longer time.   As I mentioned in a earlier post, there was an article in the business times by analysts that blue chips should be favoured over penny stocks during this turbulent times because blue chips have a stable business model etc etc. I do not agree with this view. We don't buy a stock because it is "blue", "red" or "yellow" We buy a stock because we see it as cheap relative to its future earnings potential. When market sentiment is bad, all "coloured" stocks get beaten down including the "blue ones". I feel with both fundamental and a bit of technical analysis would be more useful. You might do the best research and you can still suffer substantial losses.  tanglinboy      ( Date: 27-Jul-2008 21:32) Posted: July 27, 2008, The Sunday Times Beware of penny stocks My dreams of high returns turned to ashes as I succumbed to the temptation of riding on cheap counters By Jessica Cheam When I was growing up, the stock market was this mysterious concept that my parents would talk about with their peers as I listened, wide-eyed with innocent curiosity. They would either be gleefully discussing how they made a tidy profit by selling off some shares or lamenting how they suffered big losses by getting rid of some poor-performing stock. A decade later, with A-level economics, two unrelated degrees and a business journalism course under my belt, the stock market was demystified. I was no longer in awe of how it worked. In fact, I longed to conquer it. Despite my eagerness to start 'playing the market', I waited three years after I had turned 21 - the age when one can open a direct securities account - before I began. This was due partly to procrastination, but more accurately because I didn't have enough money saved up yet. In the first year that I started work, my paltry salary barely paid my bills. So when I got a decent bonus at the start of this year, I knew the time had come. For the first time, my bank account looked full of promise. The trading counters on the Singapore Exchange (SGX) website suddenly danced with life, seducing me with its changing red and green arrows. I had big dreams of making sky-high returns, doubling my bonus by playing the market and using my well-invested money to do all sorts of amazing things, like making a down payment on a flat or going for a year-long holiday. After all, I thought, I'm a reasonably intelligent person; how difficult can choosing some good stocks be? Alas, seven months since my foray into the market, my naive notions of the stock market became brutally apparent when my shares came crashing down on me. I've since retreated from the perils of trading to declare 'cash is king', while nursing untold financial losses on paper. So what went wrong? Well, several things, in hindsight - but mainly, penny stocks were my downfall. Like many young investors, I had some cash but not a huge amount, so I could either buy a miserable one or two lots of a blue-chip stock or 10 times that of a penny or small-cap stock. The temptation to ride on the price movements on these cheap counters was too great to resist. The problem was, I had underestimated the risks involved in this type of shares, which can be dangerously high. This was proven when bad news first came trickling down from the United States in January, and they were the first to tank. When their prices started to dip, I should have dumped them to cut my losses, but I had this stubborn belief, which I believe is symptomatic of all virgin investors, that my shares would recover. So when wave after wave of bad news - from the near collapse of Bear Stearns in March, to the recent crisis at US mortgage lenders Fannie Mae and Freddie Mac - crashed upon Singapore's shores, I stubbornly held on. I even stopped checking my online brokerage account to avoid thinking about every dollar of that hard-earned bonus that was being whittled down in value day by day. For comfort, I kept repeating to myself 'I'm a long-term investor' so I could sleep at night, reasoning that if I held on long enough, the stock prices would bounce back up again. But if I could go back in time, there would be so many things I would do differently. In good times, you can get away with doing superficial homework, but in downtimes, nothing short of thesis-worthy research is required, I've realised. The fatal flaw in my investment approach was my blase regard for fundamentals. I would look at a company's prospectus and/or balance sheets, check the industry outlook and convince myself it was good. My boyfriend even suggested that I base my stock picks on frivolous reasons, such as whether its name was similar to mine. (I did invest in JES International, but not because of its name.) And looking back, I really did not give the counters I had invested in the hard look they deserved. I had a big appetite for risk, was prone to impulsive buys and, in my eagerness, had failed to understand the high stakes involved and the diverse factors behind a stock's performance. Perhaps it was my mother's influence. She has never been known to check the price-earnings ratios or fundamentals of a firm. She made her money based on 'observation and feeling'. 'Aiyah, too much research no use; just observe, then buy,' she'll say. Perhaps she's one of those lucky few who have the 'knack' for good picks. But as a young player who cannot afford to leave it to Lady Luck, and who cannot afford expensive, blue-chip stocks, I've found that going back to basics - doing homework - is the best safeguard. This applies to investing in any stocks - and especially, in penny stocks, if they are the only ones you can afford. So when my friends come to me for advice these days, thinking I have gleaned some wisdom from my job on the business desk, I give the best advice I can give and say, as in the old days when we were in school: 'Don't be lazy. Go do your homework.'
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tanglinboy Elite	27-Jul-2008 21:32        tanglinboy About Contact  Quote this Post! Style: Combined   Mood: Yells: "hello!"
x 0   x 1  Alert Admin	July 27, 2008, The Sunday Times Beware of penny stocks My dreams of high returns turned to ashes as I succumbed to the temptation of riding on cheap counters By Jessica Cheam When I was growing up, the stock market was this mysterious concept that my parents would talk about with their peers as I listened, wide-eyed with innocent curiosity. They would either be gleefully discussing how they made a tidy profit by selling off some shares or lamenting how they suffered big losses by getting rid of some poor-performing stock. A decade later, with A-level economics, two unrelated degrees and a business journalism course under my belt, the stock market was demystified. I was no longer in awe of how it worked. In fact, I longed to conquer it. Despite my eagerness to start 'playing the market', I waited three years after I had turned 21 - the age when one can open a direct securities account - before I began. This was due partly to procrastination, but more accurately because I didn't have enough money saved up yet. In the first year that I started work, my paltry salary barely paid my bills. So when I got a decent bonus at the start of this year, I knew the time had come. For the first time, my bank account looked full of promise. The trading counters on the Singapore Exchange (SGX) website suddenly danced with life, seducing me with its changing red and green arrows. I had big dreams of making sky-high returns, doubling my bonus by playing the market and using my well-invested money to do all sorts of amazing things, like making a down payment on a flat or going for a year-long holiday. After all, I thought, I'm a reasonably intelligent person; how difficult can choosing some good stocks be? Alas, seven months since my foray into the market, my naive notions of the stock market became brutally apparent when my shares came crashing down on me. I've since retreated from the perils of trading to declare 'cash is king', while nursing untold financial losses on paper. So what went wrong? Well, several things, in hindsight - but mainly, penny stocks were my downfall. Like many young investors, I had some cash but not a huge amount, so I could either buy a miserable one or two lots of a blue-chip stock or 10 times that of a penny or small-cap stock. The temptation to ride on the price movements on these cheap counters was too great to resist. The problem was, I had underestimated the risks involved in this type of shares, which can be dangerously high. This was proven when bad news first came trickling down from the United States in January, and they were the first to tank. When their prices started to dip, I should have dumped them to cut my losses, but I had this stubborn belief, which I believe is symptomatic of all virgin investors, that my shares would recover. So when wave after wave of bad news - from the near collapse of Bear Stearns in March, to the recent crisis at US mortgage lenders Fannie Mae and Freddie Mac - crashed upon Singapore's shores, I stubbornly held on. I even stopped checking my online brokerage account to avoid thinking about every dollar of that hard-earned bonus that was being whittled down in value day by day. For comfort, I kept repeating to myself 'I'm a long-term investor' so I could sleep at night, reasoning that if I held on long enough, the stock prices would bounce back up again. But if I could go back in time, there would be so many things I would do differently. In good times, you can get away with doing superficial homework, but in downtimes, nothing short of thesis-worthy research is required, I've realised. The fatal flaw in my investment approach was my blase regard for fundamentals. I would look at a company's prospectus and/or balance sheets, check the industry outlook and convince myself it was good. My boyfriend even suggested that I base my stock picks on frivolous reasons, such as whether its name was similar to mine. (I did invest in JES International, but not because of its name.) And looking back, I really did not give the counters I had invested in the hard look they deserved. I had a big appetite for risk, was prone to impulsive buys and, in my eagerness, had failed to understand the high stakes involved and the diverse factors behind a stock's performance. Perhaps it was my mother's influence. She has never been known to check the price-earnings ratios or fundamentals of a firm. She made her money based on 'observation and feeling'. 'Aiyah, too much research no use; just observe, then buy,' she'll say. Perhaps she's one of those lucky few who have the 'knack' for good picks. But as a young player who cannot afford to leave it to Lady Luck, and who cannot afford expensive, blue-chip stocks, I've found that going back to basics - doing homework - is the best safeguard. This applies to investing in any stocks - and especially, in penny stocks, if they are the only ones you can afford. So when my friends come to me for advice these days, thinking I have gleaned some wisdom from my job on the business desk, I give the best advice I can give and say, as in the old days when we were in school: 'Don't be lazy. Go do your homework.'
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