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Penny Stocks to Watch: HMNY & SGMD

The past couple weeks have brought MoviePass and it’s parent company HMNY to its knees.  With no path to profitability and massive losses piling up, the stock has lost 99.9% of its value in just a few weeks.  The reverse split puts its original share price at $0.0002, that’s 2 hundredths of a penny!  With the original share structure it would take 50 shares to make a full penny.  Is this company done-for?  Or is this an incredible once-in-a-life-time opportunity to make some killer profits?  I’ll share my thoughts and moves below.

Sugarmade (SGMD), is a small California-based company that supports the legal cannabis industry.  They have a few innovative products and have made several acquisitions in the past year.  This is also the stock I have made my single largest profit on, you can read more about that here.  They sent out a press release last week which sent the share price soaring!  It gained 40% in just one day!  This company has a lot of potential between now and the end of the year.

The Fall of MoviePass and Impacts on HMNY

HMNY (HELIOS AND MATHESON ANALYTICS INC.) is the parent company of MoviePass, MoviePass Ventures, Moviefone, and Zone Technologies.  We will start with the big news, MoviePass, which has been in the news and has been declared dead by many.  I disagree and actually see some potential with its new business model.

MoviePass’ original offering was to allow subscribers to pay $10 a month and see as many movies as they wanted with a few restrictions.  Moviepass was paying full price for the tickets, which can run well over $10 per movie.  I have read many articles where analysis have theorized that MoviePass wanted to use the gym subscription model where they sell many subscriptions but few actually get used.  I reject this completely because movies are already big business and the industry is making money hand over fist through people who come and pay more than $10 to see a movie.  If you offer them the same entertainment at a fraction of the price, people will flock to it and use it.  This is what Moviepass was counting on.

According their annual filing, HMNY intended to grow the subscriber base quickly and exponentially and leverage their  purchasing power into multiple revenue streams from studios, theaters, concessions and advertisers.  At the time of the acquisition, MoviePass accounted for about 6% of movie ticket sales in the United States.  With the incredibly discounted offer, they hoped to grow that number to well over 50% at a lightening pace.  If they control that much of the ticket purchasing they will have a lot of negotiation power and push movie goers toward or away from certain movies and theaters.  They would essentially take control of the market and be able to dictate the terms to the rest of the industry.

The Future of HMNY

Keep in mind that MoviePass is only one of HMNY’s multiple companies.  It is possible for a company to have one company go bankrupt and keep the others intact.  That in and of itself tells me that HMNY has a future even if MoviePass does not.

MoviePass Ventures is set to release a movie staring Bruce Willis, a top A-list celebrity.  His name alone will bring in $50 million in revenue even if the movie is terrible.  Moviefone is a website that has more than 6 million monthly visitors.  Zone Technologies is working a unique GPS that keeps you away from high crime areas.

The current market cap, or valuation, for HMNY is about $100K even though they have more than that in cash on hand.  At $0.05 this is a bargain in my eyes.  There is a chance the whole company gets de-listed from the exchange or declares bankruptcy, which means I could lose everything I put in.  On the other hand, the share price could climb back over $1 within a few weeks or months and even see $6-$8 in the next year or two.

My Move:

As the share price fell over several weeks I kept an eye out for a buying opportunity.
On 8/3 the price appeared to bottom out at $0.06 per share.
On 8/6 the price spiked to $0.18 on news of a new business model for MoviePass, $10 for 3 movies a month.

I sold 650 shares (1/2 my position) of RIOT for $6.75 each.  Total sale was $4,384.19 a loss of $614.31, about 12%.
I bought 52,000 shares of HMNY for $0.085 each, total cost $4,429.90.

I could be dead wrong about this stock, please trade at your own risk.

Sugarmade’s Upgrade

A press release from 8/8 stated that the company was now current with all it’s filings.  They had been behind for a while and many investors grew weary of the company because they took so long to get the proper filings in.  The press release, not yet confirmed by regulators, stated that they were now current on all filings required by the SEC.  They further stated that they were upgraded back to the OTCQB market.  See below for an explanation of these markets.

The Markets

OTC, over-the-counter markets, is where penny stocks live.  The OTC market is divided into 3 segments in order to give traders and investors an idea of how risky the stock is.

The lowest is OTC PINK, also known as pink sheets and OTC other.  These stocks are behind on their filings and no one really knows how legit the company really is.  There are few requirements to be listed in the pink.  Some are shell companies, some might not actually have any revenue, the pink are the wild west, this is the place to buy lottery tickets.  Some might skyrocket while most will fizzle out.

The next tier up is OTC-QB.  These companies are required to have a share price of at least $0.01, not be in bankruptcy, be current on all their filings and have a qualified sponsor.  This is the tier that SGMD claims to be in.

The top tier is OTC-QX.  These companies must have a minimum share price of $0.25 and market cap above $10 million. Filing and sponsorship requirements still apply.  These are the least risky of the riskiest stocks.

All stocks have some risk, the NYSE has the most stable and least risky stocks.  The NASDAQ is very tech stock heavy, so there is much more volitility here.  The OTC markets are the wild west.

Sugarmade (SGMD)

Last year the price spiked to $0.43 without prospects of an upgrade.  I am currently holding 41,000 shares with an average price of about $0.15 each.  My intention is to hold these as the price climbs and set a stop-loss order at $0.40 after it breaches this level.  The price has the potential to reach $1 or more within the next year.  I will likely be involved with this stock to some extent for the foreseeable future.

Final notes and Thoughts

The two penny stocks I discussed today are extremely risky.  My personal investment in these companies is not advice to do the same.  Please keep in mind that I could lose my entire investment in either of these companies.

On a personal note, I got a raise at my day job.  My new take home pay is about $100 more per week.  Beginning 8/3 I will be contributing an additional $50 per week to my trading account.  That is now $100 per week to my trading account and $105 to my IRA.

Please follow this blog to see if I can make trading my full time job by the end of the year.  Follow me on twitter for live trades.  Thanks for reading and happy trading!

Facebook: the Biggest Loss EVER! plus BITCOIN: It’s Your Move

In the past 2 weeks, I have become a little more active in my trading, Bitcoin is on the rebound and Facebook recorded the biggest single-day loss in the history of the stock market.  Bitcoin it’s your move. This may be the last chance to get in cheap(ish).  Facebook and FAANG decline, what you should make of it.

Bitcoin’s $6,000 Bounce

Bitcoin, as you can see on the graph to the left, has been a bit of a roller coaster in the past 6 months.  With its all-time high of over $19,000 from December seeming like a distant memory no one was quite sure how far the price would fall.  In June the price dropped just below $6,000 and quickly jumped back up above it.  After getting back over $6,000 it seemed to stall for several weeks, which led to much speculation about the end of Cryptocurrencies.

Nothing could be further from the truth, Bitcoin is not dead and likely has a long future ahead.  Many institutional investors have been flocking in since the beginning of the year.  Some governments around the world are holding large quantities and even Goldman Sachs, the bank with the closest ties to the US government, has invested heavily in setting up their own Bitcoin exchange.  Goldman is one of the few large, well recognized, well-established banks that is welcoming the world of cryptocurrencies.  In my opinion, they see the writing on the wall and don’t want to get left behind.  If you can’t beat them, join them!

At this writing, the price has rebounded above $8,000, essentially bouncing off of the $6,000 support level.  The coming weeks may see a strong continuation, $10,000 will provide a challenge; if it can break through that, the sky is the limit.

Bitcoin It’s Your Move

This is quite possibly the last time that Bitcoin will trade this low.  A year ago today Bitcoin traded at $2,800 and the early investors celebrated with lobster and champagne.  While Bitcoin is a long way from its all-time high above $19,000, it is currently trading at an attractive level for those wanting to get started.

I invest in Bitcoin with Coinbase, follow this link to start your own account.  We will both receive $10 worth of Bitcoin if you purchase at least $100.  While I believe the price of Bitcoin will grow exponentially in the next few years, there are no guarantees.  Invest only what you can afford to lose.

FAANG and the Fall of Facebook

FAANG is an acronym for the big tech stocks that seem to have limitless growth potential.  Facebook (FB), Apple (AAPL), Amazon (AMZN), Nexflix (NFLX), and Google’s parent company Alphabet (GOOG, GOOGL).  These stocks have been exploding, gaining between 50% and 150% each year since the great recession ended in 2010.  The bigger the gains the bigger the falls.

NFLX was trading near its all-time high of $420 per share when it’s earnings report came out, the share price has dropped to $340, a 20% decline in about 1 week.  This was a result of slowing subscriber growth.

FB was trading at $217 per share but when it reported a loss of users, it dropped to $175 in a single day.  This loss equated to more than $100 billion, the largest single-day loss in value of any stock in the history of the stock market.

AMZN reported strong earnings but with the constant attacks coming from President Trump’s Twitter account the stock has declined since the earnings report’s rally.

GOOG, GOOGL, and AAPL all showed strong earnings but have been declining over the past week, too, most likely being brought down by the rest of the FAANG stocks.

Your take away from this earnings season is to understand that all stocks can be dangerous.  Stocks are capable of falling faster than they gain.  The market has no sympathy for anyone who decides to play in its dangerous waters.  If you are an investor you can ignore this headline.  If you are trading, take note and know that no matter the indications, it is dangerous to hold a stock during an earnings report.  Past results have no guarantee of future earnings and growth.

The Trades

Here are the trades I have made over the past 2 weeks.  These moves have brought me $792.61 in total realized gains, not bad for part-time work!  Follow me on Twitter for all my trades live!

7/16 Sold 13 shares of GOOG for $1,180.00 each, total sale $15,334.85.  Profit $509.90, about 3.4%.
I had bought those shares on 6/13.
I sold these before earning because I did not want to take the risk of losing the gains I had already made.

7/16 Bought 56 shares of TSLA for $309.32 each, total cost $17,327.39
7/17 Sold the same shares for $312.00 each, total sale $18,429.15.  A profit of $139.42, about 0.8%.
When the share price declined, I took the small profit that was available.

7/17 Bought 48 shares NFLX as it rebounded from the poor earnings report.  The share price was $383.84, total cost $18,429.15.
Sold them a few minutes last as the price reversed direction.  Shares sold at $380 each, total sale $18,234.80.  A loss of $194.35, about 1%.

7/18 as oil prices have jumped around I saw that MRO was at an attractive level to buy in.
Bought 920 shares of MRO for $20.17 each, total cost $18,557.49.

7/24 sold all 920 shares of MRO for $20.74 each, total sale $19,075.49.  A Profit of $518.00, about 2.7%.

7/24 Bought back into TSLA, 66 shares for $301.56 each, total cost $19,907.57
I missed several great cash-out opportunities because I was working and not able to watch it.
7/27 Finally sold for $302.95 per share as the price began to plummet.  Made a profit of $81.91, about 0.4%.

7/27 Bought 548 shares of TWTR, for $36.44 each, total cost $19,974.07.
I was thinking the share price might rebound after a bad earnings report sent the shares on a premarket slide.
I was wrong, the price continued to decline, I sold when the price reached $35.98.  Total sale $19,711.80, a loss of $262.27, about 1.3%.

New CRYPTO Investment

As the week drew to a close and Bitcoin continued to look strong I bought into RIOT, a company whose primary business is the mining of cryptocurrencies.  I bought 1,300 shares for $7.69 each, total cost $10,001.56.  As the price of Bitcoin rises this stock will likely follow.  If the price of Bitcoin declines this stock is likely to follow.  I will hold this stock until I can cash out a good profit or Bitcoin collapses.

Final Notes

Every Friday I contribute $50 into my Brokerage account and $105 to my IRA.  I did so on both 7/20 and 7/27.

On 7/27 I bought 25 shares of MJ an ETF that follows the legal weed industry.  I paid $26.50 per share, $667.45 total.
This is part of my retirement, my goal is about 25% in this ETF and the other 75% in PRGFX, a fund that follows the S&P500.
You can always view all my current investments here.

I had a side hustle come through for a nice profit of $1,270.00.  I deposited this into my brokerage account on 7/17.

R2B coin, a new cryptocurrency, that I put $543 into back in February, is scheduled to begin trading on 8/23.  The current listed value is over $32,000. Follow this blog to see if I can actually sell the coins for anything close to that.

I have made several high-risk, high-reward bets in the past few months.  Follow this blog to see what makes a profit and what goes bust.  Real Profits, Real Losses, FREE LESSONS!

Thanks for reading and Happy Trading!

New Trader Experiment

If you are looking at my current holdings you might be a little intimidated.  The value of all my accounts is more than $40,000!  For me, that is a lot of money!!  The real purpose of this blog is to help people who have no experience get into the market, so I have started an account that has very little money in an attempt to grow a small investment over time to something larger.  As a new trader, it is best, in my opinion, to start small with some skin in the game.  You will pay more attention to the market if you have some of your own real money invested.  For this account, I will start with just under $10.

The Setup

As I have been getting my feet wet as a new trader and investor over the past 14 months I have had several ups and downs.  Here is a screenshot of my Robinhood Account which I funded with $2,000 back in February.  You can see plenty of ups and downs, the lowest point my loss was $468, nearly 25% of my investment.  Through several trades over several weeks, I brought it back to the positive and even turned a profit of $9.53.

I cashed out my initial investment and put it back into my E*Trade brokerage account for larger trades.  I will take the $9.53 left over and attempt to grow it into something more without adding any more cash.  Given that it is not much money I will be very limited in my selection of stocks.  Since I can’t spend more than $9.53 on any one share.

The Trades

6/19 bought 2 shares of CHK for $4.63 each, total cost $9.25.
6/27 sold those share for $5.25 each, total sale $10.50, a profit of $0.75 or 8.1%.  Not bad percentage-wise but still only 75 cents

6/27 bought 3 shares of GERN for $3.55 each, total cost $10.65.
7/6 sold those shares for $3.75 each, total sale $11.25, a profit of $0.60 or 5.6%.  Once again a solid profit!

7/6 bought 20 shares of GST for $0.55 each, total cost $10.98.

At writing GST has dropped to $0.13 per share, about a 75% loss.  I am giving it a little time to see if it comes back.  One thing for certain, you will not make money on every trade.  You must take the wins with the losses and come out a better trader on the other side.

 

Please follow this blog to see where this account goes in the coming months and years!  Thanks for reading and Happy Trading!  Feel free to ask questions in the comment box below.

The Secret Sauce: What it Takes to be a Winning Trader

We all have aspirations of buying into the next Apple or Amazon for a few dollars or even pennies a share.  The problem is the waiting, we all want that return tomorrow.  Take a look at the charts for Amazon and Apple below; a $10,000 investment 15-20 years ago would make you a millionaire now.

I want you to understand something right now, no one knows what a stock will do tomorrow.  Apple is an industry leader with revolutionary products.  One of Apple’s most successful products was the iPod.  It’s mostly obsolete now but they were all the rage in the early 2000’s.  Do you remember the Zune?  That was Microsoft’s competing product, it was a total flop.  Had the Zune become the dominant product, Apple might never have achieved all the success that the iPhone and iPad have brought it.

AAPL was able to build off its success and start the smartphone as we know it today.  Without that initial success of the iPod, we might only remember that AAPL built the first personal computer  then competed with HP and Dell in the personal computer market.  Instead, we have a revolutionary company that leads the tech sector in innovation.

One more thing to note on these charts, look at the dips that occur as the stock price rises.  Some of the dips are 10-15%.  Not everyone has the nerve to ride this roller coaster for this long.

Investing vs Trading

The INVESTMENTS in Amazon and Apple could have brought you fortune if you were able to accurately predict the future 15-20 years ago and had the discipline to hold the stock even during down times.  Trading is very different than investing.  While both are essential parts of the market, but they have very different requirements.  Investing requires patience and diversification.  Trading requires you to be able to gauge reactions in the short term.  The topic of trading v. investing is more complex and I have addressed it further here.

Ok enough is enough, I promised you the secret to profitable trading.  I can bore you all day with definitions and charts.  What does it take?

The Winning Trader

Nothing worth having in life comes easy or fast.  So if you are expecting to stand on your left foot and jump three times and trading success will arrive please stop reading and find another scheme.  The secret to being a winning trader is experience.  Not a special formula or chart overlay.  No amount of artificial intelligence or reading will make you a winning trader.  If you want to learn to trade and get good at it, you must start trading!  That’s it!  Simple right?

Simple, yes, but long, tedious and excruciating.  You will lose money at some point, guaranteed; maybe not your first trade and maybe not in your first week.  The key is to manage your money and manage your risk.  Managing those two items takes, you guessed it, experience!  Before starting this journey I read Toni Turner’s A Beginner’s Guide to Day Trading (follow the link to get a copy for yourself).  She spent the first 4 chapters talking about the mental game of trading.  It wasn’t until chapter 5 that she discussed actual trades and actual stocks.

Trading is a very emotional game and if you have read enough of my earlier posts, I have plenty of tales to tell about losing money when I let emotion get in the way.  You must condition yourself to detach from the trades.  Forget that the money you are trading with is real and your own.  You must concentrate on making good trades and then you will become a profitable and winning trader.  The discipline is only achieved with experience.

Your Next Step

Start trading!  Open a FREE account with Robinhood and start trading for free!  The money is real but they don’t charge any commissions.  I have a full review of the platform here.  Follow this link and when you sign up and make your first deposit you will receive a free share of stock!  What better to start off you trading endeavor than with a guaranteed profitable move?

Thanks for reading and happy trading!  Follow this blog for lots more insights and lessons.  Follow me on Twitter for live trades.

Investors and Traders: Why We Need Both

Investors and Traders are both vitally important parts of the financial market.  Investors give stability to the market and don’t care much for the day-to-day swings.  Traders only care about the day-to-day swings and have ways to make money either way whether the prices are going up or down.  So which is better?  What should you do?

The Truth

Only you can decide what you should do.  The market needs both investors and traders.  One would be in trouble if the other didn’t exist.

Investors

Investors leave their money in the market and in the stocks they have invested in.  If there were only investors, you would have a hard time selling your shares when the time came.  Traders give the market liquidity and provide investors with a sense of comfort knowing they can sell their shares at any time and there is always a trader standing by ready to buy them.

Traders need the investors to provide stability to the marketplace.  Image if every share of every publicly traded company was in play every day.  The swings would be outrageous and horror stories would far outpace the triumphs, scaring off would-be traders.  The stock market provides a way for companies to raise cash.  If no one was willing to buy shares of a new IPO, the economy would stop growing, at least at the rates we have become accustomed to.

Traders

Trades give the market liquidity and it gives investors confidence that they can sell their shares when the time comes.  Without liquidity in the markets, investors would not put their money in because they would not be sure when, or even if, they could sell their shares and get the money back out.  Traders buy and sell billions of stocks every day.   Most shares are sold to and from other traders, but some to investors who will hold longer than the traders.  Knowing that traders want to buy and sell these shares every day gives confidence to investors that when they decide to sell be it a week, a year or a decade, they know there will be a trader waiting to buy the shares the investor no longer wants.

Which are you?  Which do you want to be?  Do you even have to choose?

Decision Time

Good news, you don’t have to decide.  I am both a trader and an investor and there is nothing stopping you from doing the same.  I have multiple accounts and use each one differently, one for investing, one for trading and one for both.  htere are long-term investing strategies and short-term trading goals.  Here is how I use my accounts.

The Accounts

My IRA (Individual Retirement Account) is my investing account.  Currently, I have about 75% in an S&P 500 index fund.  The other 25% is in a cannabis ETF.  ETF, Exchange Traded Funds, are a great investment tool and will help you capitalize on the growth in the market without taking on risk that individual stocks contain.  Now, with less risk comes less reward, but that’s OK.  This account I am growing quietly for my retirement and I want it to stay healthy even if the rest of my trading efforts crash and burn.  Learn more about ETF’s here.  Every week I contribute $105 to this account to maximize my tax benefits.

I use my Robinhood account for trading only.  Nothing I hold here is for long-term gains. It is for short day trades and swing trades only.  I am trading with small stocks only as I attempt to take a small investment of around $9 and see what I can turn it into.  The second purpose of this account is to train me to make the right moves and apply those skills to my last account. I share every trade I make as I make them, follow me on Twitter for live trades!

My Etrade brokerage account is used for both trading and investing.  I am holding two stock, LOW and SGMD for long-term growth potential.  You could buy LOW for $14 per share back in 1999 and it continues to grow today.  This week it is near $96 per share.  SGMD is a long-term hold for me because of the huge potential upside.  SGMD supports the legal cannabis industry and I expect it will explode in the next several months to years.  The rest of the cash and margin (borrowed money) I use for swing and day trades.

Click here to see where my accounts currently stand, this page is updated weekly.  Don’t forget to follow me on Twitter for live trades!