Penny stocks for dummies.

Description

Title Page Copyright Page Table of Contents Introduction About This Book Foolish Assumptions Icons Used in This Book Beyond the Book Where to Go from Here Part 1 Getting Started with Penny Stocks Chapter 1 Getting to Know Penny Stocks A Big, Fat, “Tiny” Penny Stock Summary Defining Penny Stocks Price per share Market capitalization Stock market Mix and match Why does it matter? Comparing Penny Stocks to Their Blue-Chip Cousins Volatility and speed Safety and risk Investor following and visibility Larger stones take more force to move Chapter 2 Deciding If Penny Stocks Are Right for You Gauging the Popularity of Penny Stocks A high risk/reward ratio Limited funds Risky misconceptions Taking Stock of the Big Business of Penny Stocks You’re not alone Room to grow Making Sense of What You’ve Heard (Much of Which Is True!) Penny stocks represent low-quality companies Penny stocks are subject to price manipulation scams Trading penny stocks is a game of chance Making a Fast Million . . . Not! Penny stocks appeal to the impatient Newer investors gravitate to penny stocks Penny stocks appeal to smaller portfolios Being Honest with Yourself: Are Penny Stocks Right For You? Chapter 3 Buying and Selling Penny Stocks The Ins and Outs of the Stock Market Factors influencing which exchange a company lists on A who’s who of stock exchanges Issuing Shares Diluting a good thing How dilution affects investors When new share issues are a good thing When new share issues are not a good thing Stock Buybacks Acquisitions and Takeovers Why penny stock companies are frequently bought Resisting a takeover Understanding which companies are takeover targets Being the buyer Mergers and Amalgamations Stock splits and reverse splits Why you don’t see splits in low-priced shares Why reverse splits are common in penny stocks Bankruptcies Chapter 4 Avoiding Promotions, Scams, and Bribes Why Penny Stocks Are Perfect for Price Manipulation Who Is Moving the Price? Promoters Investor or public relations The touter The advisor Rooting Out Poor Quality Companies A good story Financially broken Weak business model Swimming against the trend The 2-pound gorilla Obstacles That Even High-Quality Companies Face Lawsuits Lost customers The 500-pound gorilla Even the Good Can Die Young Part 2 Research and Investment Strategies Chapter 5 Developing a Strategy Trading Risk Free without Using Real Money Keeping it simple: What you need to get started Setting your paper trading parameters Some paper trading considerations Tracking the success (or failure) of your paper trades What You Need Before Your First Trade Choosing a Great Broker Penny-stock-friendly brokers When to upgrade your broker Types of Trading Orders Bids, asks, and spreads Limit orders Market orders Other types of orders Characteristics of a Successful Penny Stock Trader Investing Versus Trading Investing in penny stocks Trading in penny stocks Chapter 6 Doing Your Research Doing Your Due Diligence Skimming the surface Digging a little (or a lot) deeper The Where’s and How’s of Research Stock quotes Trading charts Stock screeners Company financials Press releases Media outlets Paid analysts Investor relations Penny stock newsletters Message boards Calling the Penny Stock Company Be prepared before you dial Questions to ask management or IR Dead-end questions to avoid How to interpret IR responses Corporate and Analyst Guidance Should you trust guidance issued by the company? Following analyst guidance Generating your own guidance data How Expectations Drive Prices: Getting Baked in the Pie Expectations are more important than results Beating estimates Missing guidance numbers Penny Stocks Are Affected by Trends Sector and industry trends Trends in the overall market Trends in consumer and social behavior Market and Company Risk Let the rising tide lift your boat Investing against the current Reacting to nonsystemic (company-specific) risk Reacting to systemic (market) risk Buying What You Understand: The Free and Instant Advantage Chapter 7 Picking a Winner Narrowing Your Choices Your Elimination Criteria Who Do You Trust? Your number one ally: You Considering the motives of others Reviewing their track record Paid advertisements: The wolf in sheep’s clothing Unreliable analysts Stock Screeners Choosing criteria to focus your search Screening your screens: Getting even more focused What stock screeners won’t tell you Choosing Penny Stocks Manually Chapter 8 Penny Stock Manias Wild Speculation and Investor Stampedes Why manias affect penny stocks the most The next stampede: It’s just around the corner Penny Stock Manias of the Past: Learning from Other People’s Mistakes Pot penny stocks Bitcoin mania? The dot-com bubble in penny stocks Surviving and Profiting from Penny Stock Manias Spotting the Next Mania Why the next mania plays out How the next mania plays out Part 3 Trading Penny Stocks Chapter 9 Trading Strategies Scaling In and Scaling Out Averaging Up . . . Not Down The many downsides of averaging down The upsides of averaging up Limiting Your Losses and Locking In Your Gains Stop-loss orders Position sizing Diversification Limit orders Using only the best markets Trading Windows Timing Trades: When to Hold ’Em and When to Fold ’Em Know when to take a profit Know when to sell at a loss Chapter 10 Fundamental Analysis Financial Reports The income statement Balance sheet The statement of cash flows Numbers to Look for in Penny Stocks Good numbers on the financial statements Trends in financial results Acting On Analysis Management Is Steering This Ship Who’s who at the helm What have these managers done before? The corporate commitment level News Releases and Events Press releases from the company Coverage from third-party sources The timing of milestone events The Outlook for the Sector and Industry Microeconomic influences Macroeconomic influences Keeping your macros and micros straight Chapter 11 Financial Ratios: Comparing Apples to Apples Leveling the Playing Field with Financial Ratios Eliminating size as a factor Comparing stocks across industries The Five Categories of Financial Ratios Liquidity Ratios Current ratio Quick ratio Cash ratio Operating cash flow Activity Ratios Inventory turnover Receivables turnover Payables turnover Working capital turnover Fixed asset turnover Total asset turnover Leverage Ratios Debt ratio Debt to equity Interest coverage Performance Ratios Gross profit margin Operating profit margin Net profit margin Return on assets Return on equity Valuation Ratios Price to earnings Price to earnings to growth rate ratio Price to sales Price to cash flow Chapter 12 The Abstract Review in Penny Stocks Making Products Meaningful with Branding Why branding is more important with penny stocks When branding is done well Harnessing a Unique Selling Proposition Ensuring Product or Service Acceptance Market Share How to find out the market share for a penny stock Profit from changes in market share Barriers to Entry Gauging barriers to new competition The best first movers are the small ones Marketing Strategy and Results Poor marketing is bottomless Marketing is hard to track with penny stocks Loyalty and Attrition Customer turnover Relative order sizes and frequencies Chapter 13 Technical Analysis with Penny Stocks When Technical Analysis Is Good Why TA Often Doesn’t Work with Penny Stocks Use Technical Indicators to Spot Trading Opportunities All Patterns Break Down Technical Analysis That Will Work with Penny Stocks Clues from trading volume Support levels Resistance Trends are friends Price spikes Price dips Topping out patterns Bottoming out patterns Consolidation patterns On-balance volume Momentum indicators Moving averages Relative strength Part 4 Scaling Up Your Success Chapter 14 The Surprising Power of Mental Focus Taking a Situational Audit Unless you increase your time and energy . . . When the weeds envelope you Why the dearth of quality? Are Your Expectations Realistic? Truly knowing yourself The purpose is deeper Goals? Not everyone needs them The first step is the longest Your Penny Stock Plan Frequency and fine-tuning You do not get to have luck Take a forced rest Chapter 15 Finding the One Strategy That Works Your Solo Strategy Do less of what doesn’t work Rinse and repeat Simplicity is misunderstood One Penny Stock Truth Above All Dancing on quicksand Changing landscape Adapting to What’s Next Creating a Ritual Shrine, studio, war room, or kitchen table? A statement of commitment Opportunity Costs and Your Results Unseen small investments for major gains Extrapolate your destination Chapter 16 Debriefing for Dollars and Cents Your Opinion Is Your Mental Blind Spot Comparing results to expectations Comparing expectations to environments The intentions-to-profits contrast The assumptions you were given Media Imagery and Misunderstandings Tunnel-vision gurus Trusted friends and family Buying excitement Building Your Investing Power Collect 100 mistakes List your lessons Take an emotional assessment Change yourself to change your results Part 5 The Part of Tens Chapter 17 Ten Rapid Result Tactics Call the Company Average Up Don’t Confuse Market Risk with Company Risk Try the Product, Use the Service Compare the Wares Paper Trade Know the Corporate Life Cycle What’s Really Driving the Share Price? Watch the Short Interest Don’t Diversify, Pinpoint Invest Instead Chapter 18 Ten Trading Truths Investor Sentiment Is Contrarian Big Moves Occur During Brief Trading Windows Greater Volume Means Greater Sustainability Making Up for Losses Is Harder than Preventing Them Bigger Things Take More Energy to Move Rapid Rise, Rapid Fall Dilution Disguises Losses Buy the Rumor, Sell the Fact Don’t Try Catching Falling Knives Resistance Levels Can Flip Chapter 19 Ten Key Considerations for Companies Barriers to Entry Competitive Advantages Market Share (and Room for Growth) Customer Diversity and the Company’s Reliance Allies Insider Ownership Institutional Ownership Positioning The Secret of Flag Fall Fees It’s All About Recurring Revenues and Attrition Index EULA