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How To Short OTCBB Scam Stocks aka Adapt To Evolving Markets

Posted by timothysykes on Tue 24th of Jun, 2008 02:24:39 PM
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As sketchy as those junkie-like alternative energy companies I profiled yesterday are, ALL OTCBB-listed “companies” are a million times worse. I use the term companies loosely because a more fitting description would be schemes.

Currently, I’m not short any of them, so I don’t care whether or not you believe me—I just have a hard time understanding how the people who run, promote or work with these schemes can live themselves as their job is scamming people, and it’s mostly senior citizens who fall for this crap because they’re old, senile, wealthy and don’t realize how corrupt this entire niche is.

As I profiled HERE, HYDROGEN HYBRID TECH INC (HYHY) is $250+ million scheme with $68,000 in revenues and a multi-million spam campaign. The schemers are just as likely to be shut down by Osama bin SEC as they are to be busted by the DEA as operators of a coke cartel or discovered floating face down in the East River. (past 2 days spam mailers have stopped, nothing holding this thing up, c’mon spammers, get back to stuffing envelopes, get this thing to $400 million you lil bitches!)

Change around some words and numbers in the documents that pitch these schemes and you’ve got LOCATION BASED TECHNOLOGIES (LBAS), a $222 million scheme that looks to be falling apart over the past 2 days (although a big drop seems unlikely aka c’mon schemers, don’t stop, can’t stop!)

Change some more meaningless variables and you’ve got LAUD RESOURCES INC (LAUD), a $274 million scheme without anything behind it (although this is breaking out now, aka I might even buy into it before the market close)

So, naturally, I like to short sell these schemes and until the past few days, I had done so through my broker Thinkorswim, who clears their trades through Penson. But now, rightfully tired of not making enough $ off the laborious process of locating shares to short of these hard-to-borrow schemes and all the corruption in this niche, Penson doesn’t allow shorting OTCBBs anymore.

At first, I was pretty concerned—thinking I’d have to find a whole new broker setup, but as I reviewed all my trades over the past few months, I realized that while it’s fun to write about such blatant manipulation, I’ve never really made much from shorting these things cuz spammers and frauds have done incredibly well lately. Actually been much better to join the dumb masses and buy ‘em aka we’re gonna manipulate like its 1999!

That’s right, go on, take a look at them all, the above 3, FORC, FOUR, BSHF, MXFD, HYBR, PPBV, JYHW—none of them go down very easily, if at all…I much prefer shorting Nasdaq listed names in the $2-$6 range as they’re pretty easy to profit 50 cents-$1/share on the downside within a few hours/days…stuff like IDMI, PSTI, PTEK, STXX, PINN and now today URRE (which TIMalert subscribers know I made $200 on (detailed post coming…)

As my account grows, I will open other brokerage accounts…first stop is one of my sponsors SpeedTrader, a firm that does allow shorting of these scams (you can view their commercial HERE)
And, I’ll probly even open an account up at Interactive Brokers, but they have higher minimums so they’re out for the time being (and no for the last time, I won’t add $ to my account, I’ll break the $25k barrier on my own…now sitting above $19,800, up 11%+ on the month, 60% since November!)

That’s right, I’m not mad at anyone for the rule change, it’s just the latest step in market evolution. As those of you who have read my book An American Hedge Fund, successful strategies, regulations, players, niches and hot stocks all change, you just gotta stick to the rules you develop over time and adapt to profit from the changes…

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  • Max
    IIRC speedtrader also clears through Penson
  • younggunz
    Nice post. You are completely right. I have probably 1-2 trades ever in OTCBB and none really gave me any super returns. Not that I get the best returns anyways. Since finding out about it I haven't had to ignore any plays yet because of this change.
  • balls...or just plain nuts...
    Tim,
    After reading your book, and watching 2 of the 4 dvds (I'll finish the other 2 tonight or tomorrow), and studying the manual, its seems that you have always preferred small cap nasdaq stocks for shorting. I'll stick with TOS. I'm up $1311.32 in two and a half weeks of trading with them. And I'm in love with tosmobile.com to monitor positions from my phone while at work (i don't have a desk job, so no computer available to trade from)

    By the way, I'm glad I f-ed up a couple of months ago when I lost money by going long on coin, otherwise I would have never found your site revealing it, and many other for the scams they really are! Any coincidence that I was in the red until I found your site? Up $2200 now for the year, after recovering the $800 I lost pre-Tim. Thanks a million!
  • Wes
    Balls or nuts,

    What % are you up or what was your starting amount?
  • too many plays too little time, just sent out a TIMalert with a bunch of stuff i'm wqatching...missed my execution on LAUD breakout, anybody get it?
  • Keith
    Covered my short on VNDA from 6.01 @ 5.03 fo 770.00 profit after commissions.Good Luck All
  • balls...or just plain nuts...
    A little complicated to figure that out, as far as the percentage goes, because I have so far used three brokers, transferring a different amount of money each time.
    Started with 8500 in TDAmeritrade, lost 800 (ran out of free month of trades, so I switched out, plus they turned me down for margin, twice)
    Transferred 7100 to zecco gained 1700 (transferred out because of unavailability of shares to short, and because I broke the pattern day trade rule twice)
    transferred 7000 to TOS, gained 1300 so far
    so, I'm up 2200 altogether, but i'm not trading with all the profits, I transferred some out to my regular savings account.
  • balls...or just plain nuts...
    requested shares of mxc to short when it was at 47.30, was told there was none. can't complain, I made some money already today.
  • YngvaiMalmsteve
    I got in on the LAUD breakout, Tim. Filled at $3.47
  • awesome yngvai!
  • Rambone
    SINO could be a multi day short. Broke under 10 again. The stock should test new 52 week lows daily this week.

    APWR will retrace to atleast 25 again. Failed 3 times to hold 30.

    If KRY goes under 1 another great short.
  • balls...or just plain nuts...
    I'm in laud for 500 shares, late entry, 100 @ 3.69 and 400 more @ 3.80
  • screw all the other stocks, u should all be in LAUD...c'mon Yngvai cant be the only one other than me who saw that breakout...where my TIMAlert subscribers at?
  • sniper6
    nice pullback in home builders at the close. gonna fall flat like a dead cat tomorrow hehehehehe. Also looking for gap down on URRE, not enough time to trade today!
  • YngvaiMalmsteve
    Jumped out of LAUD when it got near $4....fill price $3.985...$150 profit for me in an hour...300 shares was all I had buying power for. Could've held overnight but decided to lock in the profit...don't want to risk a morning sell-off, particularly since it ran so far today.

    I had a few poor trades today, but despite those, my account was still green today, up another 1.5% from yesterday.
  • YngvaiMalmsteve
    In fact, since June 10th, I've only had 3 red days on my account. Can't thank Tim & Mike enough for the info they post here...things are turning around for me....hopefully Tim will be interviewing me in the future :)
  • Bob (VC)
    Balls, and anyone else on TDA- lie your ass off about your net worth figures and income on the margin upgrade form. They don't even do a simple credit check when you apply for Margin, so they have no idea.
    I was also denied for margin twice until my local rep looked into it and told me I was denied due to liquid net worth issues, and suggested that I should be "liberal" with my figures. Adjusted and resubmitted- Problem solved.
  • noobtrader.08
    Max... can you explain your comment? I'm assuming you mean each brokerage has a clearing house???

    Thanks in advance.
  • T-T-Tiiiimmm, I got anally-raped-in-a-dark-alley today by Un-American/Fascist Osama Bin SEC today for violating the PTD rule (I have a tiny account, sooo tiny it's not worth mentioning AKA its under $10K after my recent string of losses)
  • Yosako
    If those stocks are a pain in the ass to borrow...is it impossible to NAKED short 'em?
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Date Stock Buy Sell Net
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Nov 17 NLST $5.04 $5.59 $2195
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