Rise of the PENNY STOCKS?!

I was cleaning my room one rainy morning, as I stood there miserable with my hands all black and dusty; strong gusts of wind welcome itself into my room and blew stuff all over. Like a little annoying kid that have gone out of control, my documents, old newspapers, dated research reports and past homework flew like never before. Frustrated, i decided to just stop for awhile and enjoy the strong breeze while my stuff continues to get bashed by the naughty wind.

I however spotted an old newspaper cutting that was stuck between my 8days (nearly flew out the window), as i held and took a good look at it, i found something interesting to talk about.

Dated Thursday August 2 2007 Money page , title “End of the penny party as share prices take a dive” the article reads, that the penny dropped with a resounding crash yesterday: Small-cap stocks are no longer a licence to print money. Some shares dived more than 20% while the UOB Sesdaq (now is known as catalyst) plunged 10.3%. Shocked retail investors- the main buyers of penny shares, could do little but watch as their hefty paper profits were washed away in a tide of red ink. One investor whose portfolio plunged 10% told the Straits Times: “Bloody hell! It was a bloodbath la, can’t do much I’ll just have to ride it out” . Construction sectors stocks were the worst hit yesterday, with no gainers, 32 losers and six closing unchanged. The biggest loser in the sector was Permasteelisa Pacific Holdings, which plunged 8 cents or 18.6%. Axle-maker Baker Technology was down 8.5cents or 20.2%, while Chasen Holdings known as China Entertainment Sports dropped half a cent to 1.5 cents.

Biggest loser over the five-day free fall was Alantac Technology, down 46.08% to 27.5cents, another punter’s favourite-Jade Technologies slumped almost 31% to 30.5 cents over the same period. UOB Kay Hian the biggest brokerage in Singapore restricted online trading in 13 stocks earlier this month, these include Alantac, Ban Joo, BBR Holdings and Jade. The article goes on to ask, is the worst over? The expert response was “they usually last 16 trading days based on the last four corrections, a month after the last four corrections the market would resume its normal behaviour after a few days if fickleness combined with fear, so it is a waiting game for those with nerves” Another investor who lost 10% said “Im quite confident the market will rebound, as corporate profits and economic fundamentals are still very strong”
Based on hindsight, we can see how short-sighted people were at that point in time, experts were giving wrong advice and retailers were as oblivious as ever. We also see major investment errors such as holding on to losing positions and hoping for a rebound. Nevertheless, what’s past is the past. But like many things that happened in the past, the probability of it happening it again i believe is quite high (talking about cycles in the market). So my next question is, will penny stocks rise again? Given that they have already tumble so badly these past two years? We relook at past penny stocks that rode the rally and made huge profits for investors
1) Alantac Technology estimated highest price : $0.33
2) Stratech Systems : $0.06
3) Middle East Development: $0.26
4) K Plas Holdings : $0.13
5) VGO: $0.07
6) Armarda Group:$0.27
7) Advance System Automation: $0.10
8) Lereno Bio-Chem : $0.14
9) Eastgate Tech:$0.07
10) Baker Tech:$0.35
11) Oculus:$0.24
12) Lantrovision:$0.21
13) The Lexicon Group:$0.07
14) Berger International:$0.19
15) Amplefield:$0.06
16) HLG Enterprise: $0.42
17) Startech Electronics: $0.06
18) Jade Tech:$0.33
19) Select Catering services:$0.55
20) Cyber Village Holdings:$0.10