Is this a good stock to buy now?

[kv968]

Not zero idea. I've got that source that says it is a good time to buy now. This isn't exactly gambling, I've got this insider information, and my intuition tells me that if I buy now and sell after >5% increase I would make a quick profit.

Why are you sidetracking? I am just simply stating that I have some knowledge regardless whether other people have it or not.

Let's just make this simple. I am not doing anything illegal. So if it means I do not have information that others don't have then it means that.

I wouldn't say you're doing anything illegal such as insider trading nor would I say you shouldn't invest in individual stocks.

But let's take a quick look at the "hot tip" from your friend's friend...its a $0.72 stock that trades on the Hong Kong exchange, does business in China and hasn't been profitable at all...That to me sounds like gambling. And I'm not against taking a gamble every now either but just realize that's exactly what you're doing. Good luck.

[bigdaddybus]

I wouldn't say you're doing anything illegal such as insider trading nor would I say you shouldn't invest in individual stocks.

But let's take a quick look at the "hot tip" from your friend's friend...its a $0.72 stock that trades on the Hong Kong exchange, does business in China and hasn't been profitable at all...That to me sounds like gambling. And I'm not against taking a gamble every now either but just realize that's exactly what you're doing. Good luck.

True dat!!!!

I invest roughly 80-85% in index funds as it sounds a majority on here do. The other 15-20% I buy individual stocks after doing evaluations of the companies, short stocks or the S&P using double or triple leveraged funds. To some on here I might be a gambler, but my track record doing this far out performs my 80% index funds....so I will continue.

Do I buy penny stocks from China? Never have. I would if the company has low debt, rapid earning growth, and other good fundamentals. With fee sites like yahoo finance this info is simple to find out.....if you know how to read it. If the OP doesnt, I suggest you read a book by Peter Lynch, Jim Cramer, etc that explain it

[MatthewC]

platorepublic,

You have asked for someone to give you numbers and statistics backing up there position, so here I shall do so.

Individual stocks are only dangerous to your portfolio when they are not properly diversified. What is an index made up of? A ton of different INDIVIDUAL STOCKS.

Traditional actively managed funds has a very bad track record. From 1991 to 2009, the range of these funds beating the S&P were anywhere from 11% to 68%. Only 3 of these years were above 50% and these statistics did not include any of the funds that ceased to exist (read: they FAILED, so the results should actually be lower). (taken from page 2 of What Works on Wall Street (4th Edition))

From 1964 to 2009, the stocks that make up the top decile (top 10%) in Price-to-Earnings Ratios (the cheapest) returned 16.25% compounding, compared with 11.22% of all the stocks this group was taken from (included every company in the USA worth more than 200 million as measured in 2009 dollars) (page 84, What Works on Wall Street (4th Edition). Over 10-year periods, this strategy beat the group of stocks it was taken from 430 out of 433 times (page 85). The worst 10-year return on this strategy out of those 433 times (each year is taken from the perspective of the 1st of the month of each month in the year, so each year contains 12 of these portfolios) was 6.07% (page 84). I am pretty sure that these returns don't take into account buying and selling costs, and just sort of "index" across the 10%. Just keep that in mind.

Fast forward to page 584-585. The best strategy in the book, from 1964 to 2009 returned 21.19% and beat that group of stocks 433 out of 433 times, averaging beating them by 9.86% a year over 10-year periods. What does this strategy include? Well, it basically uses a combination of 7 different statistics. (If you want to know which ones, buy the book!) - And the worst return over 10 years? 10.16%! And what did this strategy involve? Well, once you got through using those 7 statistics, you simply bought the top 25 stocks!

That's right, this strategy simply buys the top 25 stocks rated this way and offers performance that all the index advice you are receiving will not be able to compete with. You wanted numbers, here they are. You can take the market returns offered by many indexes - or you can go for the stocks that offer superior returns AND safety at the same time (Over the long run. There is no stock strategy that offers safety over 1-year periods. Keep your eyes on the long-term results.).

[FrugalSensei]

449.62% gain in one year? That is indeed "hot". And online gambling is indeed a hot area. I invest in the casinos and know that they are anxious to take a bite of the online gambling area. I also know that the Chinese gamblers (via Macau) are really helping the bottom lines of casinos who do business with them. HOWEVER ...

I have invested in a few Chinese companies in the past and urge caution. I have won big but lost bigger. I won't say any country or race is more corrupt than any other because I believe there is good and bad everywhere but I will say that it was really difficult to get the full picture on those companies and to know that they operate under a whole different set of rules than us is unnerving at times. You might be new to investing but you've probably heard about numerous price-fixing tactics and questionable accounting and labor practices.

At a glance I would say that this company looks very similar to my prior Chinese investments - rocketing skyward in a very short amount of time and featuring a very cheap price (in terms of dollars - not economic evaluation).

The golden rule with any type of investing/gambling is to bet no more than you can afford to lose. My advice for stocks like these is to not get involved at all unless you can afford to lose everything you put in because they can drop as fast if not faster than they rose.

I concur with many others who say to get as much info as you can. I was only able to view a 1-yr chart but to give you an example of how misleading that can be check out one of my old investments (symbol CCSC). Look at the 1-yr then check out the 3-yr. After you're done laughing think of how many tears I shed as I watched my investment disappear faster than I could evaluate and react to the situation.

Good luck to you whatever you decide.

[platorepublic]

Update: Since I started this post, the stock I mentioned rose by about 40%. 40 F-ing %.

But guess what? I didn't buy it. Not because of your advice, but I was just preoccupied.

What a tragedy... haha.

Given that it has rose 40%, should I still buy now? Conditional probability and Bayes' Rule FTW.