A couple trading and market notes first.
Prayers for all hurt by these conflicts. Traders seem to want to look past the impact of wars, which is unfortunately much more serious and risky to US investors than things like Greek Debt Crises. “U.S. stock futures fell Monday, as investors took in news of a deadly weekend in the Israeli-Palestinian conflict and potentially tougher sanctions from Europe against Russia in the wake of the downing of a Malaysia Airlines passenger jet.”
Our Russian Yandex call options are looking increasingly like they’re not going to work out for us. We used a tiny bit of capital on call options instead of buying any common stock as a method of limiting our losses if the trade didn’t work out over the time frame we were betting on, and in which we have about another month or so. As I explained at the time:
“I’m opening up a position in some Yandex call options by bidding on some August call options with strike prices from $28 to $35. If the stock comes back to where it was pre-crisis and/or even is driven higher by strong fundamentals and earnings reports in the meantime, I’ll have big gains in this trade. And if the stock crashes from here or even just stagnates, I’ll likely lose most of any capital I put into these call options. By using call options with strikes near the current stock price, I’m essentially creating a virtual stop loss from the outset of the trade. That is, if I pay $3 for an August YNDX call option with a strike price of $31, that means I’ll have upside exposure as long as the stock is above $34 by next August and that I’d lose all of the capital in those options if the stock were to be below $31 and never get above that before next August. Since you are getting 100 shares for each call option, you’re able to use a small amount of capital to get full exposure to any upside over $34 a share.
But as always, since you’re using options and they have a finite expiration date, you could (and often will) lose all the money you put into an options trade.
And finally, if you’re note 100% confident in your ability to make an options trade or just aren’t comfortable doing so, you could buy a tiny amount of YNDX common stock and if the stock drops below $27 or so, just sell all of it and thereby try to limit any loss to a minimal 10% from here.”
I don’t like the Fog of War that’s continuing to build as Putin’s Russia and the Republican Democrat Regime’s US rattle sabers and death tolls climb in the conflicts around the world (including in Gaza) that both have big vested interests in. If we get a random bounce in Yandex before the call options expire, I’m going to sell them.
Meanwhile, here comes FB earnings.
FB Earnings Date
Earnings announcement* for FB: Jul 23, 2014
Facebook, Inc. is expected* to report earnings on 07/23/2014 after market close. The report will be for the fiscal Quarter ending Jun 2014. According to Zacks Investment Research, based on 14 analysts’ forecasts, the consensus EPS forecast for the quarter is $0.26. The reported EPS for the same quarter last year was $0.13.
Read more: http://www.nasdaq.com/earnings/report/fb#ixzz387sI3Sxf
I’ve owned $FB common since the $20s and I trimmed a small tranche of $FB the first time it got up to $70, as it has been pretty much my largest position for the last couple years. I expect a blowout report and a small pop in the stock afterward. If $FB’s earnings report isn’t blowout, it’s a good 10-15% downside after the report. So I sure wouldn’t want to be trading it overly aggressive but as an investor, I think there is still 5x upside from $70 over the next five to ten years.
Feet to fire, I’d rather be long than short $FB into the conference call, but I’m not changing my own portfolio either way right here right now. Careful on either side of the $FB report this Tuesday.
Now for today’s report.
Without a single exception, every single crappy pot penny stock I’ve cited is down 50-90% in the last five months since I started warning you guys about them.
Marijuana is going to be huge growth industry with lots of profits to be made, but that doesn’t mean you buy a hyped up weed-related stock that has no revenue, no earnings and probably just changed it name and stock symbol so that the stock could go up on hype and insiders can sell their worthless shares to you.
Let me give you some real world examples from just the last week of how this game is played, okay?
Ever since I first wrote about these crappy pot penny stocks, my name and email has been picked up by the crappy pot penny stock hype industry and I am bombarded with emails from PR firms and directly from crappy pot penny stock PR departments begging me to hype their crappy pot penny stocks individually or the industry in general.
I get emails that proclaim, “We have recently had a breakthrough in how to track the stock price development for cannabis stocks.” See PDF below. Sigh
I get Scuttles asking me, “@CodyWillard Can you please say that ERBB is amazing, and MCIG as well. Thank you, so much, you’re the best!”
Another genius PR stock promoter for another crappy pot penny stock sent me an email last week that’s not even legible. “I see Cody Report, The covers technology and wanted to let you know about a co in the medical marijuana industry. They’re using DNA seed readers to suggest best growing cycles for cannabis cultivation, as well as EEG brain scans…” Right, DNA and EEG brain scans plus marijuana are going to change the world, and it’s a penny stock company with no sales or history of sales and earnings that’s going to do it.
Here’s another email I got last week that literally explains what they are trying to do to you individual investors out there. “Dear Cody, Please write something positive that will motivate bull investors in this stock after having to struggle 3 weeks sideways. It’s a very hot stock, your unique writing style is definitely needed to keep confidence high for individual investors rather than institutional investors, you the man who can deliver.”
They might as well put “How to lose money trading and lose credibility writing” in the subject line. You’d think they might read what I write about Penny Stocks before emailing me to try to get me to screw a bunch of retail traders by hyping up their crappy, worthless penny stock. Sigh.
Lesson? Same as it ever was, DON’T EVER BUY A PENNY STOCK! Don’t play with hype. Remember that you are the mark in the penny stock market including pot stocks. Being under a dollar has nothing to do with being undervalued.
Even if you don’t know anything about how to read a company’s financial reports or you don’t understand what a market cap is or why you’re always the mark at the table when it comes to hyped up penny stocks, you can and should at least read the SEC filings or anything else you can about any stock you’re considering buying. For example, just go read Terra Tech’s latest 10k. They have no operations and no sales and were a VoIP company til pot got hot. VoIP stands for Voice over Internet Protocol, which is a telecom thing, not a pot thing! You can find most companies’, including this TRTC’s SEC filing, on Yahoo Finance or here on Marketwatch.
We’ve saved my readers who took my advice to heart about avoiding these crappy pot penny stocks literally millions of dollars over the last six months as the collective valuations of the stocks I’ve warned you against have dropped by several hundred million dollars.
The best way to play the legalized marijuana revolution can be found here – Best Stock Picks for the Marijuana Revolution. I still like Lindsay and Calgon Carbon as derivate plays on the growth of marijuana. POT, as in Potash Corporation, is another good way to bet on the growth of pot, no pun intended. Stay away from crappy hyped up pot penny stocks like ERBB, PHOT, HEMP, MJNA etc. The best marijuana-related penny stocks to buy now? The best penny stocks to own? None of them.
Think I’m wrong? Tell me in the comments below or come join the discussion here.