As of June 11, 2011, Federal National Mortgage (FNME) trades $0.33.  Times have changed. Should the Penny Stock Market or traders trading in this market be disrespected? We think not.

Why does the Penny Stock market exist? During the 1900s, Wall Street Investment Banks and powerful brokerage firms ruled the roost. They invented, controlled the rules and created the game. It all changed about 10 years ago. The Legislative arm of Wall Street finally unseated the Wall Street powerbrokers. They installed regulations that essentially strangled and severely limited the capital raising function of smaller companies in the United States. IPOs, secondaries and selling groups became a thing of the past in the micro cap/small cap markets. The rise of the Penny Stock market today is really a mechanism of liquidity, individual and corporate need. Companies and large third party shareholders now have a place to raise capital and create liquidity that the Legislative arm effectively eliminated.

We at Cohen Research and Grass Roots Research and Distribution, Inc. have identified approximately 7,900 investor awareness websites and firms today. Some are strong; others are not. Those active promoters serve the function of creating liquidity that was once available to micro cap and small cap stocks. Without this market, many of these companies would suffer. The 2009 Recession has created even more need for liquidity. Today's Quarterback Groups are yesterday's selling groups and secondaries.

The Penny Stock Market today is active, alive, and serves its purpose. It is real. It is needed. There are excesses.  There is an enormous opportunity to make money with high risk. Over the years, there have been abuses in the Penny Stock market, but perhaps no more so than for mid cap, large cap stocks, and other trading markets. Just ask the naked short sellers in Canada in 2003.

Today's Penny Stock market provides large potential trading gains unavailable in any other market we know of today. It is not uncommon for a penny stock to go up 100% to 500% or more in a few days. Why should anyone with trading instincts not take advantage of making money, especially in these difficult times? Shrewd traders trade this market. Sophisticated traders are not ignorant. Many of these traders sift through mountains of information, some sophisticated information, much of it is hokey. The opportunities during this Recession to make a lot of money are there for the bold; not the faint of heart.

Should you short term trade in the Penny Stock market?  Statistics say yes, indicating that this is a short term traders market; not a long term investor's market.  Please note:  As of June 19, 2011, 96.3% of our 108 initiate coverage research reports share prices have gone up 95.2% within 24 average days.  We believe this price appreciation reflects dollars spent in a campaign, short term trading activity, and our research credibility. 85.2% of all stocks increased their volume while 81.5% reached their highest price within 30 days; 18.5% went up by more than 100%.  Clearly this seems to us to be a short term trader's market.  Sharp traders take their profits in short periods of time.  The trading risks, however, are considerable.

Should you invest long term in the penny stock market?  Statistics say no and indicate this is not a long term investor's market.  What goes up normally must go down.  Unless you believe a company will be adequately financed long term for about 5 years, it is highly risky to invest for the long term, especially in a recession.  When investor awareness campaigns terminate, the majority of share prices historically go down; primarily from profit taking and lack of dollars being spent in a given campaign.  Since 2002, we understand that there have been tens of thousands of campaigns. 

Our 121 company initiate coverage and 3 update reports statistics indicate that 85.5% of all of our stocks are currently trading at 43.4% below initiate coverage prices.  We are uncertain whether these prices are better or worse than the industry average; we suspect better.  Many of the tens of thousands of companies have gone out of business; we do not know the exact number.  The conclusion, however, is clear.  It is highly risky to invest long term in any company in the Penny Stock market.

On March 1, 2009, we began recording our email marketing distribution and performance statistics (March 2009 – November 19, 2011).
STOCK PERFORMANCE:
1.  Initiated coverage on 121 companies + Updates on 3 companies.
2.  96.8% of all stocks researched went up by 86.7%
3.  16.9% of all stocks more than doubled in price
4.  82.3% of all stocks reached their high price within 24 days.
5.  85.5% of all stocks increased their volume