THE GOOD OL’ BOY NETWORK IS ALIVE AND WELL
Last night, I sent out a flow chart to members going over a good ol' boy network that is operating in our largest holding. Good ol' boy networks. You know, when a group of well-heeled gentlemen put together a business with the sole purpose of enriching their network of people. It's typically a closed door affair, catering solely to members of the network. Stumbling upon an established good ol' boys network can be a monstrous find if you come across the right group. These networks only exist due to past successes. The members are not in the position they are due to being a bunch of sheep who have been fleeced and hung by their toes in the past. Good ol' boy networks can rarely stand more than one failure. They quickly dissolve. You can assume that if you find one with a well established history, their most recent investment will have a very high percentage chance of succeeding. We've come across a doozy of a good ol' boys network. We're talking a staff of executives at a newly created company that have been in business with each other for decades, having formed numerous ventures that have created hundreds of millions in wealth for members of the network. And now they are involved in their newest project, buying up stock through private offerings, as the public markets cannot absorb their massive demand. One member of the network is buying stock in the company for his wife's retirement account. How many men do that without absolute confidence in the potential outcome? It's a bunch of friends and family here. All well to do, well established people. Through research, we've stumbled upon their latest venture...and it's our largest holding. Not just because of the good ol' boys, but also because of the raw potential we see in what the company is doing. There is a reason this group of good ol' boys has been together for as long as they have, and it's not because they suck. Join Zenpenny today and receive a 12 page research report, outlining this opportunity, as well as our 3 other...
I USED TO BE RICH
You know, I used to be rich. It was all consuming for me. The power and prestige that went along with having a large bank account, a top of the line vehicle, the best home decor, parties, top shelf type stuff. I had investors banging down my door to invest money. Soon after seeing their account value grow, I would get "thank you" calls or gifts. They would constantly call and write, asking for various financial ideas. I treated them all very well. Never skipped a message, never ignored them, would always take time for them. This was very cool for a kid in his mid-20's. A college dropout that started trading instead of going to school. I was advising lawyers, doctors, real estate investors that were twice my age. They would refer their friends to me...individuals that were richer than them. Some of them I never even talked to once. I would get a request for an offering memorandum, and a month later I would get the documents back and a wire for $500,000. I made sure my overhead always kept up with my newfound wealth. I started buying paintings, jewelry, expensive dogs flown in from across the country. I would have done real estate, but my spidey senses told me real estate was to stay away from in 2004, when I was in accumulation mode. From 2004-2006, my decision to stay away from real estate would be the savviest move I make. The bombs starting dropping one after another shortly after the first quarter of 2004. For the first time in my career -- that was going on 10 years at that point -- I was getting bombarded. The bombardment came in the form of not being able to clearly interpret the markets. And even worse than that, forgetting about some of the fundamental rules that had gotten me to where I was in the first place. One mistake led to another until things just began snowballing out of control in 2005. My investors were beginning to lose confidence. I was getting redemption notices left and right. I remember so clearly, there was an investor from the East Coast who put her money into my fund precisely at the top, in the first quarter of 2004. The manner in which she tore into me on an almost weekly basis during what seemed like the decade long year of 2005 was epic in terms of sheer ferocity. She lost a good deal of money and she let me know how much I sucked with a great deal of clarity. It became a self-reinforcing cycle of psychological anxiety, depression...
OF MICE AND BEARS…AND EVEN BULLS
You can just feel it in the air. We're at one of those points in the market here where a bunch of bears are close to throwing in the towel, in the form of short covering. And a herd of bulls are one breath away from abandoning any hope for buying at lower prices and just smashing the offers. If the bulls can turn this market today, it may happen over the next day or two. It would be a move that create more volatility during the coming pullback/consolidation phase. When you yank out the bidders of last resort, you get a bunch of hollow bids below the market and very solid offers overheard once things turn south. That's the danger here. Our portfolio has opened the day flat. Nothing doing over here, but some sitting of the tight...
SOME S&P 500 FOR YOU AS WE PREPARE FOR WOOLY WEDNESDAY
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A FAQ THAT EVERYONE NEEDS TO UNDERSTAND
One of the most common questions we get from those who are thinking about joining the service is whether or not there are picks, trades, investments that we make outside of the micro-cap/penny stock arena. My answer to them is an emphatic, unequivocal and spirited...hell NO. Why am I so adamant about this? Here's why: I've been doing this (by this I mean trading, investing) my entire adult life. I started in 1994 and with the exception of the time I took away from the markets after I closed the doors to my hedge fund in 2006 - 2008, I've traded, watched, advised and commented on the markets almost every day for the past 17 years. You know what all that experience has brought me? A knowledge of myself. Of my psychology, my fears, my tolerances, my balance. It has also brought me the knowledge of where I excel. I know exactly what pitches to swing at every single day. This gives me a success rate for each investment I make that is higher than most. It allows me to be aggressive with our picks, which brings us the potential for large gains, with a surprisingly well controlled risk profile. Why would I swing for a curve ball or a slider, when I know I am a fast ball hitter? If I hit a homerun with 3 out of 4 fastballs that are pitched to me, but only 1 out of 10 sliders and 1 out of 20 curve balls...I would have to be insane to even entertain the idea of swinging at anything but the pitch that I know will go the furthest and offer me the greatest chance for success. That's what the micro-cap/penny stock market, with a focus towards restructurings is for me. It's a high percentage bet that I am able to hit homeruns with over and over again. After all these years, why would I deviate into something that will give me 50% of the success with 100% more headaches? And that is the reason you won't see me trading anything but my specific, very focused niche. It's my bread and butter. And it has cost me a fortune to discover this particular loaf of bread and stick of butter. I ain't lettin' go. Join us. It'll be a profitable education, at the very...
SHED YOUR HUMANITY AND START THINKING LIKE AN E.T.
You have days like these in the markets. They come along more often than in any other line of work. Days where you begin getting antsy from the inherent desire to produce, accomplish, create. At least, that's the way I feel. The market tends to attract those who are driven by greed and desire of a better, if not the best, life for themselves. It certainly doesn't attract the humble hare krishna crowd, looking to hit a big score in their favorite stock, before getting back to their daily routine of chanting. You have a bunch of ego-driven sharks who on a daily basis are trying to devour those who can't function on the same speculative level as them. Given the type of crowd we're dealing with here, when days like today come along when the best course of action could indeed be to do nothing, it creates inner-conflict. The thought that less could be more is so foreign to the trading crowd that individuals greet this reality with deep suspicion. It's a counter-intuitive game boys and girls. Less is more, green is blue, and up is often times down. It's a field of battle that is designed to separate you from your money at every opportunity. It's a wealth transfer mechanism at its finest. The more alien you can be in your emotions and actions, the better of you are. Human beings not welcome! Our portfolio was down slightly today. Off its highs the past two days. Sitting tight for...
ZENPENNY ON THESTREET.COM
This piece was posted on our blog yesterday. Hope you enjoy!
BEING BULLISH ON GOLD IS SO COOL
High school is an interesting place. You essentially have a group of people who are entirely unsure of their identity in the present or at anytime in the future. This causes a hierarchy to take form. Those who are deemed the coolest are held in god like status at the very top. Most fellow students admire them, some dislike them, but overall they have a lot of influence over what or who is cool at school. An interesting article came out about gold yesterday. It mentioned how investors had loaded up on gold, with the central banks being the only holders of note who can rival investors with their gold holdings. The article was basically a gold bull orgy. Analysts are bullish, individual investors are bullish, George Soros is bullish, John Paulson is bullish. The article basically leaves you with the perception that gold will be infallible going forward. When the cool guys (Paulson and Soros) start getting mentions, it serves as a psychological safety net for investors. It's similar to high school, where you feel like if you are hanging around the "cool guys", you have a social force field around you that makes you more handsome, more funny, and all around a much cooler dude. Individual investors are the same way, the standard Joe Investor upon reading an article about the benefits of owning gold and knowing that he is in with the coolest guys in school -- Soros and Paulson -- will develop a false sense of safety. After all, Soros and Paulson are two of the greatest financial minds...what could possibly go wrong? Unfortunately, for the individual investor...a lot can and will go wrong with an investment in gold while it's being advertised as an investment that is destined for continued greatness. What individual investors don't realize is that while Soros and Paulson may have positions listed in their filings that involve long holdings amounting to billions of dollars in gold, they can easily neutralize or reduce those positions through a million different ways that are not listed in the filing. The billions of dollars in gold longs, may be in the process of being reduced right here and now, through various means of hedging or outright selling. The filings showing gold holding are after all delayed by a few months. And let's not forget the fact that it is the very nature, the essence, the goal and duty of the market to destroy the wealth of those who pile into trades and ideas that are overcrowded, oversubscribed and create an air of overconfidence. Gold as an investment possesses all of these qualities at present....
4 CHARTS TO MUNCH ON AS WE HEAD INTO TURBULENT TUESDAY
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A LITTLE SOMETHING FOR EVERYONE
I'll be updating the charts tonight. As I outlined over the weekend, the markets were in the mood for a breakout. They started the morning strong...ended with somewhat of a whimper, especially in the Nasdaq. I have been focusing on the SOX, as it's a market leader. It did indeed hit the top end of the channel and pulled an ugly reversal today. Nasdaq followed, however, it did manage to close the day up...well off of its highs. S&P did better...closing a bit off its highs. I'll be going through some indexes, indicators and stocks tonight, as we're at an important point for the markets...