Stocks (Pink Sheets)

[clove]

I only started investing a few months ago. I have a portfolio of 4 stocks. Three of them are doing great; together they bring my portfolio up around 10% on average. However, I have one that has been falling since I bought it. It's killing my portfolio; it's down as much as the other three are up in total. Also, it's the only one in the pink sheets.

What do? Rich jerks' advice needed.

[SnerpGoodWord]

Without a ticker symbol, it's impossible to give any advice other than to avoid the pink sheets in general.

[Andrew Gubb]

Maybe get rid of that stock? Totally inexperienced advice

I'm only interested in stocks, but I've never gone into them. What I can see is that you just need to diversify enough that the risks are offset by the gains.

Sorry I can't say anything better!

[clove]

It's MNGGF. I wanted to invest in Mongolia, cuz Mongolia's starting to do good business with growing China. So, I bought this. It's down 12~13% since I bought it in summer. All my other picks are up.

Options:

1) Ditch now, eat losses
2) Wait for it to come up, then ditch
3) Stay with it long-term

I'm a new investor and would like some advice.

[Peterw]

Originally Posted by clove

It's MNGGF. I wanted to invest in Mongolia, cuz Mongolia's starting to do good business with growing China. So, I bought this. It's down 12~13% since I bought it in summer. All my other picks are up.

Options:

1) Ditch now, eat losses
2) Wait for it to come up, then ditch
3) Stay with it long-term

I'm a new investor and would like some advice.

Make a decision as to how much of a loss you're prepared to take on it. What % of the investment is it now in the red? Decide something like "If it (or any other stock) loses x% of it's value get rid of it" Have a pre determined stop loss to keep you from ever getting stuck in the loss trap

Then if it hits your stop loss price just knock it on the head and move on to the next one.

Losses happen and are a part of investing. What reasons did you have for buying it and are those reasons still valid?

[SnerpGoodWord]

I don't think a stop-loss is an effective strategy on an illiquid pink sheet stock. If your broker even let you enter one, slippage could be ridiculous.

I actually kind of like the management and story on MNGGF. It's untradable junk, but at least it's the kind of junk that might pay off huge 5% of the time. If the amount you're in for is small and losing 100% would be OK, I would probably just hang on and see what happens. If the though of losing 100% is unacceptable, then you shouldn't have put on a trade this illiquid in the first place, but then I would get a quote and sell at market if you can stomach the price.

[Clint Cora]

I have been an equity investor (stocks, mutual funds) for a few decades and I must say that I haven't been that impressed overall, especially with the last ten years. Like many others out there, my own investment portfolio has been rather lack lustre in recent years due to the economy and recessions.

I have started to move away from the equity market and invest in real estate. The value of my own house went up $100,000 in the past three years. I can't see how any mutual fund had gains anywhere near that in recent years.

[clove]

Originally Posted by SnerpGoodWord

I don't think a stop-loss is an effective strategy on an illiquid pink sheet stock. If your broker even let you enter one, slippage could be ridiculous.

I actually kind of like the management and story on MNGGF. It's untradable junk, but at least it's the kind of junk that might pay off huge 5% of the time. If the amount you're in for is small and losing 100% would be OK, I would probably just hang on and see what happens. If the though of losing 100% is unacceptable, then you shouldn't have put on a trade this illiquid in the first place, but then I would get a quote and sell at market if you can stomach the price.

I may as well do this. Losing 100% is losing 2,000 USD, which I can make back in a month or so.

[NoJobRob]

Yeah... stay away from pink sheets and OTC stocks, unless you just trade them short term using technicals. Don't get me wrong, you can make good money trading them, but it's not for less experienced traders. The penny stock pro's make a killing off of them, but the average Joe loses his shirt, even if he gets lucky a time or two.

What you're going through now is one of the main reasons I switched to forex a couple years ago. I just got sick and sicker of trying to trade penny stocks, only to see my capital evaporate. LOL I did make some good money doing it, but with my account being small at that time, and with the pattern day trader rule, and 3 day settlement on a cash account, it just wasn't doing it for me. I'd make a couple lousy trades and then basically be out of action until later in the week or the next week, and I only hit a home run every 2 to 3 months. Granted, those home runs were for hundreds and hundreds of percentage gains, but then the cycle would start anew and I'd see all my profits bleed from my account. LOL Well, not all of them, I always transferred a portion of my gains to my bank account, so I didn't walk away empty handed at least...