International Forecaster Weekly

The Great Trade

This is the first time in my 25+ years of writing that I ever endorsed looking into pennies and OTC’s. But things change and right now the landscape is still rich in this sphere. Don’t go overboard, don’t get pie in the sky ideas. Just look around the area, and if you find something interesting take a small shot.  This atmosphere won’t last forever, so it’s now or never.

Bob Rinear | February 17, 2021

I’ve been personally investing and trading stocks and options since 1994. That’s a long time. And in all of those years, trading has afforded us the ability to have a family, own a couple homes, drive nice cars, eat (too much) fine food.  Rich? Not by any American standards, no, not even close. But comfy.

And in all of those years, the two greatest wins I’ve personally witnessed were the two “vegas” plays we did. My friend Ted coined it a Vegas play, because we were going “all in” so to speak. The idea of the play was that we’d buy call options on a stock we felt had a great chance to run higher, and as the option worked and increased in value, we’d use that extra value, to buy even more contracts at a slightly higher strike. Over and over, laddering up. Our goal was to get the maximum amount of contracts that we could buy going all in with the profits from the last buy. It worked. Everything lined up.

In the course of about 16 months, that first Vegas play took 30,000 dollars to begin with,  and  became 1.3 million.  For me, seeing it was the play of the ages. I mean, “come on, man!”  30K to well over a million in just shy of a year and a half??  We saw a similar set up several years later and in that scenario, 19,000 became 244,000, and it did it in under 7 months.

I’m not a Wall Street hot shot. I have never claimed to be a great trader. I’m just a little guy slugging it out in a tough game and was proud to personally witness two spectacular winners in my years.

I’ve never worked on Wall Street. I really don’t know what a good Wall Street trader considers a big day. But I can tell you this, I saw what I consider the best trade ever made by a “little guy” and it happened from August of this year, and ended this past Friday.

The person that pulled this trade off, is not a friend of mine really. He’s simply someone I was introduced to and that I know a bit. And here’s what he did; in August and into September, he bought 10,000 dollars’ worth of a ONE CENT STOCK. It took him that long to buy that much, as it had very low daily volumes.

He was convinced that this silly little stock, was going to get discovered. What do they do? They build unmanned aircraft (drones so to speak) but very specialized for applications such as search and rescue, first responders, etc.  Founded in 2016 by former Tesla engineer Spencer Gore, the company unveiled its US-1 aircraft in 2018, unique for its long endurance and US origin.

Well, this Gent (I’ll call him Tom) Liquidated his position in this stock this past week. In at 1 penny a share, he sold out between 6 and 7 DOLLARS per share. On ONE MILLION SHARES. If you’re wondering, the symbol is/was ALPP.

So yeah, Tom netted somewhere north of 6.5 million dollars, on a 10-thousand-dollar investment. It stands as the biggest single win that I’ve ever been able to personally attest to in my history. But guess what? That’s not the only time he’s taken peanuts and made Millions. How?

Buying OTC and pennies.

I have never ever played seriously in the pennies. I’ve seen people who thought they were going to get rich in them, crash and burn. The due diligence is hard to do, there’s often not much press about them. It’s hard to gauge their success or failure, because many don’t even have to report to an exchange. It’s like the wild west. And yet, all that said, if you find the right ones, it’s the single fastest way to big money there is.

Am I telling you to all rush out and buy up OTC’s and pennies? No. But I am telling you that not all of them suck. Not all of them are scams, empty shells, an office with one desk and a phone. Some are legit businesses that have reverse merged into a shell listing, just to get public. Others were horrible companies that got rebuilt and did things right. The stories are endless.

This isn’t some new phenomenon. Penny traders have been around for years on end. But right now, RIGHT NOW it’s a whole different world. Why? Covid.

When the Covid lockdowns hit, you had millions of unemployed bored people. Some started getting the idea that “hey, I could take my silly unemployment check and buy 10K shares of XYZ and maybe make a fortune someday.”  In other words, demand for pennies and OTC’s in the last 6 months is at an ALL TIME HIGH.

How high? Just nine months ago there were over 200+ stocks listed on the majors of either the AMEX, DOW, NASDAQ or S&P indexes… that were under One dollar. Last week there was ONE. Robbin hooder’s Reddit traders and too many people with no jobs have created a demand for the cheap stuff like never before.

Couple that with the fact that so many listed companies are so insanely priced, that the little guy can’t afford them. Consider it like this, AMZN is 3,300 for ONE share. For 3 grand you can buy 12,00 shares of a 25-cent stock. If AMZN goes up 4 dollars, you made 4 dollars. If your 25 center gets noticed and they ram it to just a buck, what’s your take? 75 cents on 12K shares is 9,000 dollars.  Take out your cost and you pocketed 6 grand. Not a bad day’s work.

Again, I’m not telling you to rush out tomorrow and buy up 50 grand in pennies. Don’t be silly. But I am NOT, not even a little bit, against taking a few dollars of mad money, and trying to find something that might turn into a home run. If it’s ever going to happen, this is the atmosphere it could happen. The Reddits, the Robin Hooders, the stay-at-home covid folks are out there and it’s a fever pitch.

You do have to do some homework. Some brokerages don’t let you buy OTC’s. Some have weird restrictions on them. Some charting services like stockcharts.com which is a fantastic free platform, often doesn’t have the one particular penny or OTC that you want to look at.

I truly look at it like playing the lottery. I know I should give it more meaning than that, but seriously, in what job, what capacity, what environment could you take a silly 100 bucks, and maybe, just maybe turn it into 60 or 70K dollars on a stock like Tom picked? NONE. Nowhere, no how.

This is the first time in my 25+ years of writing that I ever endorsed looking into pennies and OTC’s. But things change and right now the landscape is still rich in this sphere. Don’t go overboard, don’t get pie in the sky ideas. Just look around the area, and if you find something interesting take a small shot.  This atmosphere won’t last forever, so it’s now or never. Good luck.