Trading Stocks on Pink Sheets Should Not Be Ignored

| About: Titan Pharmaceuticals, (TTNP)

An anonymous comment:


Here is a tip for all your readers. Though I know there is money to be made on penny stocks, the pink markets are shady and underhanded. Other people are controlling YOUR money for THEIR interests. For example, the daily PPS on SPNG has been .04 - .05 for weeks now. But try to sell? No way! My orders are not being executed even when way below the last trade. There is no listed bid/ask on the pinks. Someone is making $$$ on our hard earned money. Stay away from the pinks!

VFC's Take: I agree to a point - before investing and trading stocks listed on the pink sheets, investors need to fully understand the risks and consequences of trading the pinks and also have a game plan that involves, because of the intense volatility, being able to buy and sell on the drop of a dime.

In my opinion, the pinks are definitely not a place for the 'buy and hold' investment strategy, rather investors should always be ready to trade some trading shares in order to protect profits; if for no other than reason than that there is little transparency into most companies that trade on the pinks.

That being said, I don't think that investors who have a high risk tolerance and some 'night on the town' money to spare should ignore the pink sheets; there's simply too much money to be made if you happen to be in the right place at the right time with a pink. Additionally, because a good hit on the pink sheets could turn into a gain measured by the thousands of percent, one good pink sheet hit can set you up pretty well and cover most, if not all, of your other pink sheet bets and thensome.

Don't get me wrong, it's a risky proposition and chances are that you'll never hit on the pinks, but take Titan Pharmaceuticals (NASDAQ:TTNP) for instance - that stock went on the pinks and dropped to a cent because of a Spheramine Phase II failure and an FDA denial for Fanapt.

However, Probuphine was not dead, so I thought that a buy of TTNP for a few pennies was well worth some 'night on the town' money. That bet easily became my biggest winner. OTCPK:BIEL and OTC:BVTI have also been good winners.

As for the poster's statement that "Other people are controlling YOUR money for THEIR interests", I think that pretty much sums up life in a nutshell; everyone wants YOUR money to do what THEY want with it - that's why I don't like handing my money over to money managers, financial advisers, funds or Bernie Madoffs.

Additionally, while the pinks are certainly very risky, let's not get lulled into a false sense of security and think that the same games aren't played on the big boards. How often do those using stop-loss orders see their stop-loss disappear on a tree shake?

The sharks are out to get you everywhere and this poster's warnings should be heeded - but if an investor can stay on top of the game and understands the additional risk, there's no reason to ignore the pink sheets. Since using Zecco for my pinks sheet trades I've never encountered any of the trading problems that this poster has, so I cannot speak to that issue.

As always, I'm speaking from my own experiences, each investor should judge for themselves whether or not they can dabble in the pinks based on their own stomach for risk, comfort level and availability of 'night on the town' money.

Most importantly, the fact that pink sheet investing is highly volatile and highly speculative makes it fun; and if you're not having fun while you're investing, then you're not doing it right.