characteristics of a specky ... please add

Speculative shares

1. they are usually based on a good idea in area of mining exploration, bio technology, info technology or finance eg

FIREs (finance, insurance, real estate) ie non productive companies that are into using debt and fees eg gpt, mqg, bnb
uranium
a flu drug
a mechanical heart eg vcr
a weight lose drug
fuel reduction pill eg firepower
a rapid fire machine gun
laser tv eg arr
green technology
ethanol
2. sometimes they are located in politically unstable countries and have a lot of sovereign risk eg somalia
3. you can make a lot of money on them fast. But you can also lose everthing eg compass resources
4. a lot of them raise capital near the top of the cycle
5. banks dont lend them money so they usually have a low debt to equity ratio eg less than 10%
6. they are always short of money and so they have to go to market on a regular basis for cash
7. By the time you have invested in them it is too late. They have you over a barrel. They either cough up or you lose everything.
8. they are often run by shady characters who have been involved with companies that have failed before
9. the CEO usually gets a lot of shares cheaply via options
10. the CEOs buying and selling behaviour is usually related to share manipulation via say the spreading of rumours in the media and exaggerated announcements.
11. Sometimes you will find that the companies reinvent themselves to take advantage of trends in investing. One minute they are a dotcom company the next a uranium explorer
12. they usually dont have a financial history.
a. they dont make a profit
b. they rarely pay a dividend
c. Often they have no PE
d. they dont have any return on equity
e. they may not even sell anything so no revenue
10. few analysts cover them, if at all
11. few institutions invest in them
12. banks do not lend money to investors to invest in them but some brokers do say tricom, opes prime
13. they are usually cheap ie penny dreadfuls
14. they are often illiquid stocks which means that even if they go up 100% you may not be able to find a buyer for your stocks.
15. They are often subject to share manipulation by bots and rampers. A lot of investing is based on pass the parcel as opposed to anything fundamental.
Usually the people left holding the parcel are nave investors or people new to the game.
15. Speckies are usually the first stocks to be dumped in a downturn

stocks are valued on the basis of future earnings
at the root of this is a forecast.
In most cases, investors base their forecasts on what they know of the product, the actual business, the financial history and market forces.
If you dont have any of these you are asking for trouble

Speckies become speculative when you dont have information to make a good forecast
Eg
No history of earnings
No knowledge of what the company actually produces eg laser tv
No knowledge of how the company does business eg who the manager is and what is his track record
No knowledge of the country where a company is doing business eg somalia
No knowledge of market forces eg director buying or price trends.
Just going on a good story and price action

However having said that you can make a lot of money fast and you can lose a lot.


The best strategy for buying and selling speckies then is .
Find out as much as you can about the company.
Buy them several years into an up turn
Sell them quick should you see a down turn looming on the horizon
Dont buy them if you cant sell em
Steer clear of companies run by shady characters who are less than candid with information. Also dont get into a company run by a loser.
Look for signs of the CEO buying and selling while manipulating the share price with rumours and exaggeration.
Always have a stop lose
If you can get a loan to buy them, never meet a margin call
Buy them on the way up
Never average down
Cut your loses quickly 10% max
Let your profits run.
Dont get caught holding the parcel.