Author: Michael Goode

Deep Springs: A lesson in randomness

Longtime readers will know that I stress the importance of randomness in investing and trading. Any investing or trading strategy will produce a number of losers. Sometimes these losing trades or investments will cluster together purely by chance; it can be difficult to distinguish these chance losing streaks from a declining in a trading system’s performance.

Those without statistics training may find it difficult to think in probabilistic terms and and often do not realize how random the world truly is. Following is a real life example of randomness in action. Take two bright, motivated, and somewhat unusual young men, just five years apart in school, both living in the Chicago metropolitan area. One of them, named Michael, attends a pretty good suburban high school. The other, named Franklin, attends the state math and science magnet school. When it comes time, both apply to a number of colleges, including the most exclusive and unusual college in the country, Deep Springs.

The application process to get into Deep Springs is the most demanding application to any undergraduate institution in the country. After writing over 20 pages of essays each, submitting recommendations and standardized tests, both Michael and Franklin are given the chance to visit Deep Springs where they face a second screening, intended to winnow the applicants further (this is early in 1999 for Michael and 1995 for Franklin). One is rejected, the other accepted. Here their paths diverge.

Franklin attends Deep Springs for two years and then transfers to Harvard. He graduates with high honors, marries, and then works for three years in a psychology research lab at Brandeis University. He then applies and is accepted to enter the Psychology PhD program at Washington University in St. Louis, under renowned researched Henry L. Roediger III.

Five years after Franklin is accepted by Deep Springs, Michael is rejected by Deep Springs and instead he begins college at Grinnell College in Iowa, a well-respected liberal arts college. Three months later he drops out and moves back home, working a retail job for 45 hours a week while taking classes full-time at the local community college. After three semesters he transfers into to a virtually unknown Quaker liberal arts school in Indiana named Earlham College. He studies for a year, takes a year off to work in France, then after another year he graduates with high honors. He applies immediately to graduate school, and he is accepted to the Psychology PhD program at Washington University in St. Louis, studying with Henry L. Roediger III. Not long after starting graduate school he marries his college sweetheart.

This is a true story of how two similar people end up in the same place despite wildly divergent paths (and their paths have since diverged again). Randomness is a powerful force and given the large number of uncorrelated events we all experience in our lives, coincidences are bound to happen and sometimes they are so prevalent that we become convinced that fate and destiny exist.

Never underestimate the power of randomness. When it comes to trading it is easy to see illusory correlation and find spurious correlations that do not continue and were simply the result of random chance.

Disclosure: The above is true. Please see my terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

Some important advice for those who use offshore brokers like Suretrader

I received the following in a detailed email from my CPA. As always, get your own tax advice, but I did want to put out some information excerpted from my CPA’s email:

As part of the Hiring Incentives to Restore Employment Act enacted in 2010, U.S. citizens and resident aliens living in the U.S. and holding specified foreign financial assets with an aggregate value exceeding either $50,000.00 ($100,000 if filing Married Filing Joint, (“MFS”)) on the last day of the taxable year, or $75,000.00 ($150,000 if filing MFJ) at any time during the taxable year, must report certain information about these assets on Form 8938.

…

Failing to file Form 8938 when required could result in a $10,000 penalty, with an additional penalty up to $50,000 for continued failure to file after IRS notification, the IRS noted. A 40 percent penalty on any understatement of tax attributable to non-disclosed assets can also be imposed.

Just keep that in mind if you have decided to open up an account at SureTrader after Timothy Sykes recommended them.

[Edit 4/16/2012: This page on the IRS website indicates a significantly lower, $10,000 threshold for reporting foreign accounts on a different form, Form TDF 90-22.1]

Disclosure: I have no connection to SureTrader. I have an ongoing business relationship with Tim Sykes that is explained in my terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

A little bit of trader transparency

While plenty of trading gurus and twitter traders like to talk about how transparent they are, most say little about themselves or their trades. Many go by aliases, many post their trades only after they have supposedly made them, or put their trades up on their website, pretending that by posting a trade on their own website with no third-party verification it somehow proves they made the trade. Screw them all! I have nothing to hide so I am posting below details from my past tax returns. Furthermore, I have directly imported all my past trades (where that was possible) to Profit.ly. I went back and hand-entered trades from accounts I could no longer auto-import from. See my trades on Profit.ly here. This listing of my trades is not guaranteed to be correct — I am sure that there are small mistakes in trades I hand-entered and auto-importing of trades appears to have missed a few trades. That being said, my record on Profit.ly is an honest accounting of my trades and is very close to the gains that I have reported to the IRS.

Besides the trades that I have posted on Profit.ly, I thought I could provide a bit more information on my trading gains. From 2007 until January 1, 2011, my trades on Profit.ly show $497,167 in profit. For the tax years 2007 to 2010 I reported to the IRS $510,553 in gross trading profit (this excludes long-term capital gains and expenses other than commissions). See below for details.

2007
I do not have electronic copies of my tax returns from this year.
Long-term capital gains: $12,386
Dividends: $4,857
Gross trading profits (short term capital gains on Schedule D): $58,697

I did not have enough trading activity to file as a business trader in 2007 so most of my (modest) trading expenses were not deductible.

The vast majority of my trading in 2007 was in my individual Interactive Brokers account, since closed. See the 59-page PDF activity statement showing all my 2007 activity.

2008

Schedule D long-term gains: $5,030
Schedule D short-term gains: $203,726
Add back trading gains transferred to Schedule C: $31,451
Add back loss on private company LLC investment: $18,633
Gross trading profits: $253,810
Trading expenses: $31,451
Net trading profits: $222,359

Starting in 2008 I began filing as a business trader, which allowed me to deduct trading-related expenses. Because of the special tax treatment that business traders receive (deductible expenses but no self-employment tax) my accounting firm transfers as much income from Schedule D to Schedule C as is necessary to zero out the trading expenses.

Almost half of my trading expenses, $14,189, were due to interest (almost all of which was a loan from a family member for funds I used for trading). Getting a sit-to-stand desk and four touchscreen computer monitors accounted for another good chunk of expenses and I paid Tim Sykes a bunch of money in 2008 too.

The vast majority of my trading activity up until May took place in my individual IB account, since closed. See all my 2008 activity in this account. I opened a new account (that I currently use) at IB that was my primary trading account for the rest of the year.

Goldman Sachs trade report
Image cut from tax return Schedule D
Image cut from tax return Schedule D continuation sheet
Image cut from tax return Schedule C

2009

Schedule D short-term gains: $84,992
Add back trading gains transferred to Schedule C: $15,178
Add back short-term losses on Prosper.com loans: $201
Gross trading profits: $100,371
Trading expenses: $15,178
Net trading profit: $85,193

Again, approximately half my trading expenses were due to interest, most of which was from a loan from a family member to fund my trading accounts.

Image cut from tax return Schedule D
Image cut from tax return Schedule D continuation sheet
Image cut from Schedule C
Goldman Sachs trade report

2010
In 2010 I elected to become a mark-to-market trader; consequently my trading gains are now filed on Form 4797, not Schedule D.
Form 4797 gross trading gains: $87,871
Subtract gain on Section 197 expensed trading DVD: $156
Add back trading gains transferred to Schedule C: $3,680
Add Broadstreet trading gains: $6,280
Gross trading profits: $97,675
Trading expenses: $9,960
Net trading profit: $87,715

Image cut from 4797
Image cut from detailed statement of gains
Image cut from Schedule C for trading business
Image of other (prop firm) trading income

Lightspeed trade activity (Account opened and closed in 2010)
Broadstreet trade report (Account opened and closed in 2010)

2011
I have not received 1099 forms yet. Preliminary data downloaded from my brokers and analyzed by Tradelog is provided below but it has not been verified / double checked.

Interactive Brokers: $67,823 gross profit (net of $10,094 in commissions; $2,901,330 in sales and $2,833,507 in purchases)
SpeedTrader:  $86,212 gross profit (net of $13,153 in commissions; $4,120,830 in sales and $4,037,953 in purchases)
Capstone: $196 gross profit (net of $142 in commissions; $12,797 in sales and $12,601 in purchases)
Gross profit $154,231

I will update this post after I have received my 1099 forms.

Disclosure: I remain a satisfied client of Interactive Brokers and Capstone. I am no longer a client of any other broker or proprietary trading firm mentioned. I have an ongoing business relationship with Tim Sykes that is explained in my terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

Penny stock trader Nate Michaud settles with SEC in pump & dump case

Nathan M. Michaud, a prominent penny stock trader, has settled with the Securities and Exchange Commission regarding a civil suit filed by the SEC in May 2009 regarding a pump & dump that occurred in the stock of Asia Global from August 2006 until February 2007. Michaud is known online as “Investorslive”, has 9,000 Twitter followers, and runs the website Investorslive.com and since 2009 he has run the trading chatroom InvestorsUnderground.com. The settlement proposal, under which Michaud has agreed to pay $93,914.19 to the SEC, was filed on December 21st, 2011 with the U.S. District Court of Delaware.

The original SEC complaint in the case was filed May 20, 2009 and can be found online at the SEC’s website (direct link to pdf). A summary of the complaint can also be found on the the SEC’s website (link). The misdeeds alleged by the SEC in this case were fairly complicated and involved eight different people (since amended to include four others) and in the pump and dumps of four different stocks. A parallel criminal case filed by the US Attorney for the District of Delaware charged six of the eight sued by the SEC (Michaud and Adam S. Rosengard were the only two charged civilly and not criminally). Named in the SEC civil case and also in the criminal case were Pawel P. Dynkowski, Matthew W. Brown (founder of InvestorsHub), Jacob Canceli, Gerard J. D’Amaro, Joseph Mangiapane Jr., and Marc J. Riviello. I will not further discuss the criminal case in this post– much has been written about that already.

Following are excerpts from the original SEC complaint that highlight the allegations against Michaud. (Also see the 2nd amended complaint that I downloaded from the Delaware District Court, from December 22, 2011, which includes four additional defendants.)

4. Brown planned the Asia Global pump-and-dump scheme with Defendants Joseph Mangiapane and Marc Riviello, who were both registered representatives at a small broker-dealer in California.  Dynkowski and Defendant Nathan Michaud, who met through InvestorsHub.com, pumped the price of the stock using wash sales, matched orders, and other manipulative trading, coordinated with false, misleading, and touting press releases by the company. The scheme occurred in three cycles:  August-September 2006, November-December 2006, and January-February 2007.  After manipulating the price of the stock, Dynkowski, Brown, Mangiapane, and Riviello dumped more  than 54 million shares that had been improperly registered on SEC Form S-8 and held in nominee accounts.  The illicit proceeds from this scheme totaled at least $4,050,529.

…

46.  Defendant Nathan Michaud, a trader whom Dynkowski had previously met  through InvestorsHub.com, also participated in this scheme.  In August and September 2006, Dynkowski and Michaud, as well as others, engaged in wash sales, matched orders, and other manipulative trading to generate phony volume and artificially inflate Asia Global’s stock price.  When the scheme began, Asia Global traded for approximately 11  cents per  share.  Starting on August 9,2006,  Dynkowski and Michaud began to pump the stock using wash sales, matched orders, and other manipulative trading.  Dynkowski and Michaud continued their manipulative trading through the end of September 2006.

47.  This manipulative trading artificially inflated Asia Global’s stock price. In the space of thirteen trading days, the price ofAsia Global’s stock rose from 11.5-cents per share at the close of the market on August 9, 2006, to an intraday high of 41  cents per share on August 25,2006.   As i a  Global’s daily volume likewise jumped by millions of shares per  day during this period.

 

When asked for comment via email, Nathan Michaud emphasized that he “had nothing to do with the dumping” of improperly registered stock. From the SEC complaint: “Dynkowski, Brown, Mangiapane, and Riviello dumped more  than 54 million shares that had been improperly registered on SEC Form S-8 and held in nominee accounts.“.

The SEC asked the court to punish Michaud with the following actions:

c)  permanently enjoin Defendant Michaud from engaging in future conduct in violation ofExchange Act Section 10(b) [15 U.S.C.  § 78j(b)], Rule lOb-5 thereunder [17 C.F.R. § 240.10b-5], and Securities Act Section 17(a) [15 U.S.C. § 77q(a)];

…

f)  order Defendant Michaud to pay civil penalties under Exchange Act Section 21 (d)(3) [15 U.S.C. § 78u(d)(3)];

…

h)   order Defendants Dynkowski, Brown, Canceli, D’Amaro, Mangiapane, Michaud, Riviello, and Rosengard to disgorge, with prejudgment interest, any ill-gotten gains and provide an accounting of  monies they received;

The settlement proposal was filed by the SEC with the Delaware District Court on December 21, 2011, as was Michaud’s consent to the settlement. As is usual with SEC settlements, by consenting to the settlement, Michaud neither confirmed nor denied wrongdoing and agreed not to break securities laws in the future. He was also ordered to pay $40,600 of disgorgement of profits, $3,314.19 in interest, and a civil penalty of $50,000 (totaling $93,914.19).

From the settlement proposal:

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is liable for disgorgement of $40,600, representing profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in the amount of $3314.19, and a civil penalty in the amount of $50,000 pursuant to Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)].

Previously, Timothy Sykes wrote about the allegations against Michaud back in August 2010.

What is my take on this? I have interacted with Nate Michaud online since April 2008 and I was in his chat room for all of 2009 and 2010. In none of my interactions with him has he come across as anything less than honest and I have not later found anything of substance he has said to be untruthful. He continues to trade pump and dumps (both long and short). I do believe that he is guilty of impropriety in the case he settled with the SEC, but I have not seen anything to indicate that he has acted improperly since I have known him. Please see my disclosures below on my relationship with Nate Michaud.

Update 1/25/2012: The judge has signed off on the settlement (PDF), making it official. One interesting thing to note is that Michaud signed the settlement in November 2010 — it took over a year for it to get filed with the court and approved by the judge (due to the related criminal case against other people).

 

Disclosure: I used to be an affiliate of InvestorsUnderground (IU) stock chat, for which I received 50% of a new subscriber’s first month’s payment and 25% on an ongoing basis. I have not received any affiliate payments from them since December 2010. I am no longer a member of InvestorsUnderground stock chat; my membership ended at the end of 2010. I had subscribed to IU since its inception at the beginning of 2009 and I paid the standard rate of membership for charter members, which was $99/quarter (I also was a member of the free predecessor chat, Green on the Screen, for 6 months starting in summer 2008). From 2009 through 2010, I received a total of $5,720.39 (net of Paypal fees) from Pietro Rossa Trading (the Nevada corporation through which Nate Michaud runs InvestorsUnderground). This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

Oh what fun when stock promoters fight

Following is the text of an email I received from PennyStockProphet.com today:

Dear PSP Members, Free Trial Members and Affiliates of PennyStockProphet.com,    It is with a heavy heart that I write this email to you. I am the James formally behind pennystockprophet.com. My last name is not Connolly we changed the name to protect my identity my true name is James Edington. I am writing this email to let all of you know that I am currently in litigation with my partner who I started the website with. You see the site is owned by a California LLC (Galaxy LLC). Two partners, me and a guy named Jeff Edwards and more recently added a guy named David Gill. The Galaxy LLC also owns secretstockpromoter.com, www.stockonion.com, secretstockpromo.com, and pennypickfinders.com.

Galaxy also has about 32 other urls owned but I don’t believe they have any sites attached to them. Now I can vouch for about 90% of theses sites content is made up or taken from other sites (I did not write any of the content) my job was to pick stocks in the beginning before we where getting paid to send you advertisements. So basically what these lists are, isyou the consumer are paying for us to advertise company’s that are paying us to advertise to you. I know that does not make sense but that’s what these list are. I will also warn you about David Gill’s brother, I will not mention his name but he operates a couple sites like this and you may start receiving emails from them after I send this email out. If you do, I will send an email warning you what they are. I currently have no control of the content that is being put out or any of the company’s day-to-day operations. This is why we are in litigation.

I thought it was only fair that you should know that if you belong to a site that used my likeness and story you should know that I am no longer making decisions in regards to the messages you are receiving. I would also at this point like to make sure you have read the entire disclaimer. You will read in there about the last name change, you will also read that the testimonials on the home page are all fake as well. We also at one time had a limited spaces available ploy on our site to get you to buy our product. You will read in there where it says, “from time to time we are compensated for the alerts we release”. I can tell you that we have not purposely done any picks in the last 2 years that we where not paid for by a third party to release to you.

You may also read on every email that has been sent to you the amount in which we where paid. I will be going back to picking stock the way I used to on the bigger boards, and I will invite all of you to that list for free once I have the website up. I have attached a copy of the disclaimer and a copy of the email highlighting what I have written about in this email.

Galaxy LLC (The Owners of the PSP list) is being ran buy two men Jeff Edwards and David Gill. Below you will also find contact information for Galaxy LLC (the owner of the PSP site) and their legal council in case you had any questions.   PS. One more odd fact we all own a cupcake shop together.Don’t ask how that happened but here is a great story about it. See if you can guess who is who.    http://cottageinthemaking.blogspot.com/2011/01/for-goodness-cakes.html

Thank You, James “Connolly” Edington edingtonhj@yahoo.com  Galaxy LLC Office 18071 Fitch Suite 215 Irvine CA 92620  Jeff Edwards Jeff.edwards@galaxyllcpartners.com  David Gill David.gill@galaxyllcpartners.com  Galaxy Legal Council Larry Cron lcron@hclaw.biz 949-540-6540!

Disclosure: No positions and no connection to any of the men/entities mentioned. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

2011 Pump recap of the big 3 email pumpers: Every one of their pumps, with details

Crazy Penny Stocks Pumps

CrazyPenny has six websites that they use that I am aware of, in addition to numerous websites they no longer use and two websites that I have linked to them that are new but they have not used them for pumps yet. They also have two German pump websites that I am aware of: LoveforStocks.com and SmallCapSpecialists.com. Crazypenny usually discloses $10,000 or $15,000 (Canadian) in compensation for their pumps but their pumps move much more than such small compensation would indicate. For that reason I do not indicate the compensation disclosed for each pump below.

Click on chart images to see a larger chart.

CPOW – Crazypennystocks.com. This was actually pumped by Free Penny Alerts / Golden Dragon Media / Pudong LLC starting mid-morning on December 27th, 2010. The Crazypenny pump started on the evening of December 20th, 2010.

EARH – Crazypennystocks.com

CXLT – Crazypennystocks.com (The ticker has since changed to NSAV). This was pumped first in March in the repumped at the beginning of August.

CEYY – Crazypennystocks.com

WRIT – Pumped in March by Free Penny Alerts & friends, pumped for two days in May by Crazypenny.

HDSI – Crazypennystocks.com

POTG – Crazypennystocks.com — pumped twice. See large chart of both pumps. The first time was the longest period of continued pumping I have ever seen by Crazypenny (just look at the volume). The second time was after a 10 for 1 forward split (the stock chart did not adjust for that), giving the company 4.4 billion shares.

AMWI – Crazypennystocks.com. This went sideways for a long time before the pumpers got it to break out. The breakout day was a big up day but it actually gapped down the next day.

NSRS – This was first pumped by Crazypenny before there was even an offer. All the traders just sat around and waited for a few minutes until an offer appeared and the stock dropped from .20 to about .14 before upticking. Pennypic joined with a $600,000 compensation in the morning of day 5 of the pump and then the pumpers just kept promoting it every single day.

Pennypic.com disclaimer:

Please be advised that P ennyPic.com’s affiliate free penny alerts has been paid six hundred thousand dollars by a non affiliate third party nahualate s a [sic] for a one month profile of north springs resources corp. [NSRS]

Free Penny Alerts LLC / Pudong LLC / Golden Dragon Media Inc Pumps

CPOW – Free Penny Alerts LLC / Pudong LLC / Golden Dragon Media Inc. See above under Crazypenny pumps — Crazypenny started the pump on the evening of December 20th, 2010. The Free Penny Alerts group joined mid-morning on December 27th. I think that they were paid a total of $300,000 for the pump (adding up the compensation disclosed by each of the three legal entities), but because of how they disclose the compensation by website and not by legal entity they could have been paid much more or as little as $100,000.

“Please be advised that FreePennyAlerts.com has been paid $100,000.00 by Hefin International Inc. party to perform promotional and advertising services for a one week profile of Clean Power Concepts, Inc. which services include the issuance of this release and the other opinions that we release concerning CPOW.”

“Please be advised that PennyPic.com has been paid one hundred thousand dollars by Hefin international inc this is for marketing and advertising services for a one week profile of Clean Power Concepts which services include the issuance of this release and the other opinions that we release concerning cpow.”

“Please be advised that an affiliate of Insiderslab.com, Golden Dragon Media Inc. has entered into an agreement with Hefin International Inc which calls for payment of $100,000 cash  to perform promotional and advertising services for a one week profile of Clean Power Concepts Inc. (OTCBB:CPOW) which services include the issuance of this release and the other opinions that we release concerning  CPOW.”

DIAAF – Free Penny Alerts LLC / Pudong LLC / Golden Dragon Media Inc. Please note that unlike the other stock charts on this page, the chart below is not log scale, to make seeing the price action during the pumps easier to see. Disclaimer: “Please be advised that FreePennyAlerts.com has been paid $500,000.00 by Demyan Trading, Inc. to perform promotional and advertising services for a one week profile of Diamant Art Corp. which services include the issuance of this release and the other opinions that we release concerning DIAAF.”

KRMC – Free Penny Alerts LLC / Pudong LLC / Golden Dragon Media Inc. This one was pumped first by InsidersLab.com in the evening on February 24th but none of their other pump websites pumped it until the market open on May 2nd (after which it promptly tanked). Please note that unlike the other stock charts on this page, the chart below is not log scale, to make seeing the price action during the pumps easier to see. Disclaimer: “Please be advised that KillerPennyStocks.com has been paid $350,000.00 by Nguyet Inc. to perform promotional and advertising services for a one week profile of Kurrant Mobile Catering, Inc. which services include the issuance of this release and the other opinions that we release concerning KRMC.”

WRIT – Free Penny Alerts LLC / Pudong LLC / Golden Dragon Media Inc. They pumped it in March; the spike in May was due to a two-day Crazypenny pump. Disclaimer: “Please be advised that FreePennyAlerts.com has been paid $500,000.00 by Demyan Trading Inc. to perform promotional and advertising services for a one Month profile of Writers Group Film Corp.which services include the issuance of this release and the other opinions that we release concerning WRIT.”

ALZM – Free Penny Alerts LLC / Pudong LLC / Golden Dragon Media Inc. This also had a big budget mailer out on it too (see the pump website) and Crazypenny. The FreePennyAlerts pump began after the close on March 31st. Disclaimer: “Please be advised that FreePennyAlerts.com has been paid $800,000.00 by Blithesome Inc. to perform promotional and advertising services for a one Month profile of Allezoe Medical Holdings which services include the issuance of this release and the other opinions that we release concerning ALZM.”

Disclaimer from the main mailer pump: “CFM has received and managed a total production budget of $2,600,000 for this advertising effort and will retain any amounts over and above the cost of production, copywriting services, mailing and other distribution expenses, as a fee for its services. Breakaway Stocks is paid $3,000 as an editorial fee from CFM and also expects to receive new subscriber revenue as a result of this advertising effort.”

GGRI – Free Penny Alerts LLC / Pudong LLC / Golden Dragon Media Inc. This was set to be pumped on June 6th but the pump was delayed because traders had figured out that this was the stock that was going to be pumped. The stock promptly tanked. Once the pump began on June 27th it was quite successful. Disclaimer: “Please be advised that PremierePennyStocks.com has been paid $1,000,000.00 by Anahera Inc. to perform promotional and advertising services for a one week profile of Greenwood Gold Resources, Inc. which services include the issuance of this release and the other opinions that we release concerning GGRI.”

WTFS – Free Penny Alerts LLC / Pudong LLC / Golden Dragon Media Inc. This also had a big budget mailer out on it too ($2m budget — see it on on the SI Paid Mailer message board). Free Penny Alerts started the pump on the first big volume day in (June 16th, right after the open). Disclaimer: “Please be advised that FreePennyAlerts.com has been paid $800,000.00 by Red Panda Investments Inc. to perform promotional and advertising services for a one week profile of Xinde Technology Company which services include the issuance of this release and the other opinions that we release concerning WTFS.”

CDOI – Free Penny Alerts LLC / Pudong LLC / Golden Dragon Media Inc. These guys really killed their subscribers even more than usual on this one. Disclaimer: “Please be advised that FreePennyAlerts.com has been paid $1,000,000 by Roamata Inc. to perform promotional and advertising services for a one month profile of Cardio Infrared Technologies Inc. which services include the issuance of this release and the other opinions that we release concerning CDOI.”

CRWV – Free Penny Alerts LLC / Pudong LLC / Golden Dragon Media Inc. These guys really killed their subscribers even more than usual on this one. The first pump email I received was at 2:06pm on 8/22/2011 from VictoryStocks.com followed a minute later by RumbleStocks.com. No other websites pumped it the rest of the day or prior to the next open. Five minutes after the open the next day more pump emails started to trickle out, first from PennyStockAlley.com. The last pump email came at 9:21am on 8/31/2011. There was a one-day repump on 9/12/2011 with the first emails coming at 10:38am from ExplicitPennyPicks.com and KillerPennyStocks.com. A few of their other websites trickled out pump emails the rest of the morning and then repumped it that night but the last emails came that night at 6:34pm.

Disclaimer: “Please be advised that FreePennyAlerts.com has been paid $1,000,000 by Chantrea Trading Inc. to perform promotional and advertising services for a one month profile of Crowne Ventures Inc which services include the issuance of this release and the other opinions that we release concerning CRWV.” and “Please be advised that P ennyPic.com has been paid five hundred and twenty five thousand dollars by a non affiliate third party chantrea trading inc for marketing and advertising services for a two week profile of crown venture inc.” and “Please be advised that Insiderslab.com has been paid $30,000.00 by Third Party to perform promotional and advertising services for a one month profile of Crowne Ventures Inc.” and “Please be advised that Monsterstox.com has been paid $425,000 by chantrea trading inc to perform promotional and advertising services for a one month profile of Crown Ventures Inc.”

CSOC – Free Penny Alerts LLC / Pudong LLC / Golden Dragon Media Inc. These guys really killed their subscribers even more than usual on this one. Oh wait nevermind — they usually kill their subscribers. That is the point. The first pump email I received was from Penny Stock Alley at 9:53am on 9/19/2011. No other websites sent pump emails until InsidersLab sent one at 9:36am the next morning, followed by a gradual trickling out of other pump emails from other websites. The last CSOC pump email I received was on 9/22/2011 at 7:06am.

Disclaimers: “Please be advised that FreePennyAlerts.com has been paid $1,300,000 by Fridaus inc. to perform promotional and advertising services for a one Month profile of Caduceus Software Systems Corp which services include the issuance of this release and the other opinions that we release concerning CSOC.”” and “Please be advised that Insiderslab.com has been paid $30,000 by Free PennyAlerts LLC to perform promotional and advertising services for a one monthprofile of Caduceus Software Systems Corp.”

CSOC was repumped in November. The disclosed compensation did not change. The first repump email arrived from Insane Stocks at 9:33am on 11/7/2011 and the last pump email arrived at 11:24am on 11/11/2011.

AERN – Free Penny Alerts LLC / Pudong LLC / Golden Dragon Media Inc. I received the first pump email at 9:41am on 10/3/2011 and the last one at 9:37am on 10/17/2011.  Disclaimer: “Please be advised that FreePennyAlerts.com has been paid $1,300,000 by Sanaz Trading Inc. to perform promotional and advertising services for a one month profile of AER Energy Ressources Inc. which services include the issuance of this release and the other opinions that we release concerning AERN.” and “Please be advised that Insiderslab.com has been paid $30,000 by Free Penny Alerts LLC to perform promotional and advertising services for a one month profile of AER Energy Ressources Inc.”

AERN was repumped in the middle of the day on 10/26/2011 and then the last pump email during this stretch of pump came 24 minutes before the end of trading on 10/28/2011.

ABOT – Free Penny Alerts LLC / Pudong LLC / Golden Dragon Media Inc. The first email hit on 12/16/2011 at 9:30am. I think the compensation is $1.6m and one of the two disclaimers posted next is a typo: “Please be advised that P ennyPic.com’s affiliate free penny alerts has been paid one million five hundred thousand dollars dollars by a non affiliate third party bahadur investments inc for marketing and advertising services for a one month profile of abot mining co.” and “Please be advised that an affiliate of monsterstox.com, free penny alerts llc has been paid $1,600,000 by Bahadur Investments Inc to perform promotional and advertising services for a one month profile of ABOT”

 

Best Damn Penny Stocks.com Pumps

BestDamnPennyStocks.com has about 16 functional websites that I am aware of, controlled by four different legal entities (I can tell because they disclose different compensation amounts). To simplify below I only show the disclaimer from the main website. The total compensation is higher.

CWNR – BestDamnPennyStocks.com. Disclaimer: “BestDamnPennyStocks.com has been compensated $300,000 Cash From A Third Party International Resource Holding Ltd. For A CWNR Investor Relations Service. BestDamnPennyStocks.com expects an additional $400,000 cash from the same third party for a CWNR Investor Awarness Program extension.”

RAPT – BestDamnPennyStocks.com. Disclaimer: “BestDamnPennyStocks.com expects to be compensated $400,000 cash from a third party International Resource Holdings Ltd For A RAPT Investor Relations Service.”

GDGI – BestDamnPennyStocks.com. Disclaimer: “BestDamnPennyStocks.com expects to be compensated $500,000 cash from a third party EZenglish Inc. for a GDGI Investor Relations service.”

GDGI was repumped on September 13th: “BestDamnPennyStocks.com has been Compensated $400,000 Cash from a third party Ezenglish Inc for a GDGI investor relations service which has expired.  BestDamnPennyStocks.com Expects To Be Compensated $400,000 Cash from a third party Ezenglish Inc for a GDGI investor relations service extension.”

MDFI – This was horribly front-ran as many traders figured out it was the BestDamnPennyStocks pump before they pumped it. The large gap and drop day was the day it was pumped by BDPS right after the open. Disclaimer: “BestDamnPennyStocks.com expects to be compensated $500,000 cash from a third party Grand Palm Ltd. for an MDFI investor relations service. We have recieved $250,000 cash to date.”

HPGS – The June 8th spike was BestDamnPennyStocks.com. Disclaimer: “BestDamnPennyStocks has been compensated $300,000 cash from a third party International Resource Holdings Ltd for a highplains oil and gas investor relations service. We have been rehired and has revieved $50,000 cash and expects an additional $400,000 cash for an HPGS investor Relations Service.”

EVGI – The October 19th spike was BestDamnPennyStocks.com. I received the first pump email at 1:30pm EST. Disclaimer: “BestDamnPennyStocks.com expects to be compensated a total of $400,000 cash from a third party International Resource Holdings Ltd For A EVGI Investor Relations Service.”

GDGI – Repumped in mid-November.

“BestDamnPennyStocks.com has been Compensated $500,000 Cash from a third party Ezenglish Inc for a GDGI investor relations service which has expired. ”

POWT – All the BDPS websites were supposed to have a new pump that they had teased but only two websites, BlingBlingPennystocks.com and ThePennyStockJerk.com right after the open on December 14th. The other websites said they had technical issues and delayed the pick, pumping SPAH a week later before coming back to POWT after that.

“BlingBlingPennyStocks.com expects to be compensated $30,000 from a non-controlling party for POWT Investor Relation Services. ”

“BestDamnPennyStocks.com expects to be compensated $500,000 Cash from a non controlling 3rd party for a POWT Investor Relations Service. ”

SPAH – BestdamnPennystocks.com and substantially all of their other websites pumped this.

“Siri.biz expects to be compensated $500,000 Cash from a non controlling 3rd party for a SPAH Investor Relations Service”

Disclosure: No positions in any stocks mentioned. This blog has a terms of usethat is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

Two more weeks to give

First, thank you to the 10 people who have donated. I appreciate your generosity — no matter how much you gave.

Due to a pathetic response (only 10 donations) I am extending my 2011 Red Kettle Challenge, where I match every single online donation you make (up to a maximum of $10,000). My target was extremely ambitious, but I should hope that I can get at least another few donations. I have already matched the $1975 in donations that have been made.

Donate now

See the original post

This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

The ReaperTrades 2011 Red Kettle Challenge

I ask you to join me in raising money for The Salvation Army; the money will be used in Detroit, a city that needs not just money but also love. I will match any gifts through my donation link 100% through December 15th, up to a maximum of $10,000. So if readers of this blog donate $8,000 by December 1st using my link, I will match that with my own $8,000 gift. So if you have benefited from this blog, please consider donating some of the money I have either saved you or helped you make.

Donate Now

I am far from the greatest trader or the richest trader in the world. But I still make much more money than I need, even after accounting for the absurd sums I sometimes spend on fancy restaurants. I do not feel that I need to apologize for my success. I do not feel like I took from anyone so I do not owe anyone anything. That being said, I have compassion for those who truly need and those who truly suffer, the poorest among us. If I cannot find it within myself to give out of my abundance, then I certainly do not love others.

If I have the gift of prophecy and can fathom all mysteries and all knowledge, and if I have a faith that can move mountains, but have not love, I am nothing.

Why the Salvation Army? I am familiar with their work and have given to them in the past and I know they are an effective organization helping some of the neediest people in the United States and throughout the world. For further details of why to give to the Salvation Army I defer to my favorite personal finance blogger, FreeMoneyFinance, whose $5k red kettle challenge was the inspiration for mine:

I’ve worked with and gotten to know Salvation Army people and organizations all across America. I’ve talked to the people who are part of the organization and the people they are helping (and I’m talking about real-life “needy” people on the streets of Grand Rapids, Atlanta, Detroit, and so on). So I know they are making a HUGE difference. Because I’ve seen their work first-hand, the Salvation Army is an organization I know I can fully support.

Now some of you will object to the fact that the Salvation Army is a Christian-based organization. If your personal convictions make you want to not give for those reasons, I respect that and I hope you give generously to the charity of your choice. But if you’ve read FMF for more than two seconds I think it’s pretty apparent that I have no problem giving to a charity that’s Christian-based. Plus the fact that I’ve seen their work in person makes the Salvation Army a no-brainer choice for me.

Others may be concerned that the Salvation Army spends the bulk (or even a large part) of their money on proselytizing people or only on those of their faith. I can say with 100% certainty that this is not the case. Yes, it’s because of their faith that they help others, but they do not push their beliefs or force recipients to become Christians to get aid. They simply want to “do the most good” (their slogan) and that in and of itself is their reward. And as I’ve said, I’ve talked to many people they’ve helped and know they are doing good, selfless work to those who need the help most.

Others may wonder about the Salvation Army’s impact as an organization. Charity Watch gives them an “A-“, a pretty good grade (FYI, St. Jude’s and the Susan G. Komen Search for the Cure get B+, MDA and Livestrong get an A-). Again, I have no problems giving to them based on this measure either.

Disclaimer: Much of the above description of The Salvation Army was taken from the FreeMoneyFinance blog post on his kettle challenge and I found it better written than I could do on short notice. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

The new uptick rule (also known as the short sale restriction or SSR)

After the SEC reinstated a new version of the uptick rule following the 2008 financial crisis, there has been very little information available online. If you search for “uptick rule” most of the info you will find is on the old uptick rule. The current version isn’t really an uptick rule at all, but rather an upbid rule. This new version was first put into effect in November 2010.

Simply put, shares of a stock cannot be sold short at or below the best bid when the rule is in effect. The short seller must sell on the offer and wait for a buyer to fill his offer. The rule goes into effect when a stock’s price decreases by 10% or more from its previous day’s close. Once a stock has dropped 10% from its previous day’s close (even if just briefly dropping that far) the rule will then be in effect for the rest of the day and the next trading day. The rule can only be triggered during regular trading hours although if it is triggered it remains in force during after-hours and pre-market trading.

For those who use Interactive Brokers’ TWS platform, a little red circle will appear to the right of the stock description when the uptick rule is in effect. If you mouse over the red circle it will say “Short sale restriction is in effect from [date] to [date].”

In the screenshot below, IB TWS indicates that the uptick rule is in effect for PRGN with a little red circle to the right of the ticker.

ssr

There are some exemptions to the upbid rule but they do not apply to small traders. See this broker’s description of the exceptions.

The complete uptick rule can be found in this March 10th 2011 amendment to Regulation SHO (pdf).

I encourage reading the NYSE’s statement (pdf) about how it will enforce the uptick rule.

Disclaimer: No positions in any stock mentioned. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.