Short Selling Penny Stocks
We ALL get the emails, “UOMO is going up big, buy today” , “If you’re looking for 3000% gains go long XYZ”…the dreded penny stock pump and dump! The pump and dump often plagues new traders looking for huge returns and veterans trying to play them along with the “pumper”. But it’s often very risky and millions are lost everytime the “pump” is on. But there’s one person I personally know (I was able to have a nice sushi lunch in NY with him) who trades the “pump and dump’s” and makes a KILLING doing it! You’ve all heard about him and his name is Tim Skyes. Love him or hate him, he’s one of, if not the best person out there for penny stock info and trading.
See you and I hate spam, but Tim LOVES it…because he trades the spam, and trades it well. Today I’ve asked him to give us crash course on Short Selling penny stocks, and I can truly say he delivers. Please take time to read the article, visit TimothySkyes.com if you’re even remotely interested in how the whole penny stock world works, and then let the comments FLY! He wants to answer any and all questions and if you’d like to know what he’s REALLY like, ask me in the comments as well!
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People often ask me what I do for a living and I love to see the look on their face when I say, “I short sell and write about hyped up and manipulated penny stocks”
When I first started blogging in 2007, Investopedia said it was not possible to short sell penny stocks. They have since changed their minds now that my big mouth has been shouting at the top of my lungs, you can short stocks under $5, it’s not as risky as you might assume, but only if you know what you’re doing.
The key to my survival and success in a decade-long career in this greatly misunderstood niche has been to be wary of everyone and every company. Most people buy penny stocks thinking that they have a shot at turning a few hundred or thousand dollars into millions. Certain financial websites that title articles “The Next Million Dollar Penny Stock” look to take advantage of that.
I take it one step further, looking to take advantage of those gullible suckers as they fail to realize the odds of a $1 stock becoming a $100 stock, let alone a $5 or $10 stock, are horrific. Mainly due to the fact that ALL stocks trading under $5 are flawed in some way (that’s why their stock price is so low). Whether they’ve done a toxic financing, had bad earnings, one of their products flopped, insiders have ransacked the company’s cash, the company has unaudited financials—there’s a million things that are wrong with them—but I don’t just short sell any random penny stock.
I only want to short the most actively traded penny stocks, the ones that have recently spiked and attracted thousands of traders due to current world events, stock promotion, newsletter and media mentions. I like shorting penny stocks, really only stocks trading between $1 and $5 per share, true penny stocks under $1 per share don’t matter to me, that have spiked 200, 300, and sometimes 500% in a few days based on what I believe to be temporary catalysts.
I spend hours each night digging through SEC filings, ignoring their hype filled press releases, creating daily watchlists for TIMalert subscribers , trying to find the ugly truth behind the penny stock world’s biggest winners.
Some recent dirt:
Sucker-filled Hemispherx Biopharma (AMEX: HEB) has surged 50 cents to $4 in the last 2 months on rumored FDA approval for their drug, all while doing two financing’s at an average 40% discount to market prices…and now they’re trying for their third! Check out my recent post from June 9th. ( I shorted at $4.18, covered at $3, but even now at $2ish, it’s still a potential short)
SpongeTech Delivery Systems (NASDAQ: SPNG.OB) has combined advertising at sporting events with paying stock promoters several hundred thousand dollars & millions shares of shares of stock to send out email blasts and write articles about how great the company’s products are, sending this infomercial sponge-seller’s stock surging from 1 cent/share to 28 cents/share in the past 2 months (I shorted at 18 cents, covered at 11), now at 15 cents/share, it’s still a potential short.
These are just a few recent examples, there are always new pump & dumps, to throw out that very technical term, and by doing what nobody else does, namely investigative research (above and beyond just agreeing with the company’s rosy press releases).
Tim Skyes
My site TimothySkyes.com is a great tool for any trader out there, but if you’re really interested in making some great trades, then check out my DVD’s, and if you’re ready to take it to the next level become a member of TimAlerts today.
but how does the average investor short a “penny” stock? we aren’t allowed on our online brokers.
He has friends at certain brokerages (I think either IB or ToS) and you mention his name early in the morning and they let you “reserve” shares of the stock to short.
–joe
I have the same problem with Scottrade. They won’t allow me to short anything below the $5 mark. Could you please let us know how to do this, or which brokers allow it? I have asked many times and have never found out how to do it. Also, is there a danger in borrowing these shares when the owner can call them in at any time?
Can you suggest a place where we can get the spam too? I don’t get of thos anymore for some reason.
Thanks
Mark
Short selling penny stocks is not allowed by U.S. regulations and for good reasons. Most of these are young companies trying to get off the ground and the short sellers destroy their share price before they get off the runway. I am surprised that Market Club would support such a practice. I believe it us unethical and that someone like Timothy Sykes is just a common criminal stealing from honest investors who are trying to help build a company. As a successful developer of new businesses I have watched this practice for years and have seen it destroy many new small companies and many jobs that they provided.
Shame on you Brad and on Market Club for supporting such a practice.
Dr. Hal H. Simeroth
Hal,
you are right on the button..!
Hal - don’t be mad that he found a way to make more money then you. And also - he wouldn’t be shorting them if the companies themselves had not been paying firms to pump up their stock with spam in the first place.
Cannot short any stock lower than $3 with my online broker.
What broker are you using to short a stock at 18 cents???
I’m very curious…
Thanks
Assume you do your due diligence and cull out only the worthwhile “penny stocks,” why is selling short preferred over going long.
DO you go long on any of your penny stock picks?
thanks
Gary
I have a friend in africa country- Nigeria who is interested in your business. Is he eligible to apply
An average investors can short a penny stock. You just need to have the right broker like Think or Swim & Interactive Brokers.
http://www.my10000dollars.com/timothysykes-review/
Did a review for his site if you’re interested. Good luck
I am interested in going Long on good prospects and Shorts too, by well researched recommendations . .
but the price of your learning discs are horrendous !!
Such prices, as you mention, are out of fashion and would not give it a second thought. There are umpteens of ways to make money on the market. Lots of them are going begging (I have had six or more promoters with big guns). When I mentioned Burney Madoff, they all went silent. Such promotors are out for themselves and NOT worth the time and money !!
Bill N.
I use and recommend online broker Thinkorswim & Interactive Brokers for shorting stocks under $5, Scottrade and Etrade suck for shorting. And bill, my DVDs are only a few hundred dollars, most people charge thousands and they have no track records, they dont share their trades openly nor do they have THOUSANDS od customer testimonials…I am offering a deal!
—-I see no difference between your ‘activities’ and those of your countryman madoff.
john.
Hi Timothy,
A number of penny stock promotions end up in my e-mail box. All are paid for, not objective stock reviews, of the sort you describe. I’ve looked into shorting a few of them, such as HLXW, CBCA, AMNG and my broker (Fidelity) shows no shares available for shorting. Do you have to sort out which penny stocks can be shorted, or can you short any of them.
Thanks,
Joshua
Finding shares to short is difficult, but I recommend Thinkorswim & Interactive Brokers…gotta wakeup early to reserve shares at Thinkorswim, thats the best odds usually
Really, I am very much appreciate on your post. Thanks…