satyr

Overbought Stocks

I agree with whoever said that lists are a good place for a discussion to begin, and also with those who questioned whether being above a 50 DMA signified "overbought". I find this perspective to be a rather arbitrary, particularly when other key elements are ignored, such as forward PE. Some of these stock were perceived on the brink of BK not long ago, so a significant rise once the dust settled is not unreasonable.

Cheap Stocks Aren't Always Bargains - Barron's

The main trouble I have with this line of thinking is that it incorrectly attributes cause and effect. Stocks that go from $10 to $0.50 are not risky because they are under at $0.50. Rather, they dropped to $0.50 because they are risky. Once the price has dropped, the risk has been priced into the stock. In other words, the wise time to sell would have been before the drop, not afterward. So, if you want to buy a speculative stock, it may well be trading under $1. For those who are willing to tolerate higher risk, there is nothing inherently wrong with these because of their price. If you don't want a speculative stock, don't buy one, regardless of price.

I've also seen the analysis that shows how stocks that fall from $10 to $1 often take years to make it back to $10, and many never do. Aroo? Most stocks that are trading at $10 also take years to make it to $100, and many never do. Making a 10x gain in a short period of time is kind of rare - so pointing this out about low priced stocks is close to meaningless.

As for the potential for de-listing, this is a mirage. Aside from the relaxing of the rules, any company that wants to avoid this problem simply does a reverse split. At the push of a button, a $0.50 stock can become a $5 stock, or a $50 stock for that matter. Does that all of the sudden take the risk out of the company and make it investment grade? Honestly, people who use this kind of logic as an indicator have a weak grasp of accounting and securities regulation, in my opinion.

25 Companies That Lost America Nearly $1 Trillion

Quite a lot of distortion here, both in terms of facts and interpretation of them. Enough said, I think.