Nobody ever dreams being a penny stock trader. When I was 13, my parents gave me $12,415 for my Bar Mitzvah, which sat in a savings account. I was a great tennis player in my teenage years and practiced every day for nearly 10 years. I went to college basically for that as well. However, at age 18 I was injured and I had surgery on both my arms which prevented me from playing anymore. All this was happening in 1999 when the stock market was going just ballistic. I took the $12,415 and in my senior year of high school, made over $100,000. Freshman year of college I made about $710,000 in profits. I’m from middle class so this was a lot of money. I was just blown away and I decided to only focused on penny stocks.
With regular stocks you have CNBC, Bloomberg, Wall Street Journal, a million websites; everybody covers them. It’s very efficiently priced. For example, if Google reports earnings, you’ll know within seconds because 3,000 people are reading the same press release and 30 people have already commented on it. With Penny Stocks, it’s very inefficient. The news doesn’t get out very quickly. For example, Liquid Metal (LQMT), is just one of the Penny Stocks that I follow because they now have a deal with Apple. This occurred back several months ago but nobody picked up the press release if there even was one. It could have been an SEC filing because companies have legal filings. For two days no one noticed and then all the press started coming in. It’s very delayed so you had two days to buy the stock, which I did. I bought it at 55 cents, a day later to 80 cents a share when people are just recognizing it, and then when the press hits it, it was up to $1.70.
My first four stocks were Supercuts, Viacom, Boston Celtics, and Business Objects. These are real companies worth billions and they just wouldn’t move. I had a small account at first and was checking the stocks everyday. On my first trade I made like $6,000. My account increased by 50%. If you’re an investor or a trader and you can increase your account by 50% over the course of a year, that’s fantastic. However, I did it in about a day and then 10 times my money in the first year. I’m just using these scams, for lack of a better word, and these volatile companies, and betting on them going up or down. You can go both ways.
I don’t care about 99.9% of stocks out there. So, I focus on what works, and what really works are these kinds of earnings reports through press releases. Four times a year come these report earnings. Companies update their investors how they are doing. Right now, it’s earning season. A big thing are newsletters. You’re looking for these specific catalysts. There are lots of websites out there that claimed to have good picks and the picks for stocks are mostly compensated. If you send enough emails to people, you might actually get the stock moving higher. That’s when I like to bet against it because whoever is paying for this promotion, once they’ve sold out their shares, it’s over. The strategy is called pump and dump.
Every single day I’m looking at the biggest winners. I don’t care about stocks that are doing nothing. I don’t care about thousands of stocks that supposedly have good stories. I care about stocks that are moving because they are in play which means traders are trying to manipulate them. They are trying to pump them. Usually, with just a small amount of research, anybody can Google the company and the word scam, to find a research report. Google Maps is huge.
I love pulling up Google Maps on some of these company’s ‘headquarters’. I’ve exposed hundreds of companies. Promoters hate me. They turn out to be barns or little shacks in the middle of nowhere or strip malls. They are fake companies but they get up in terms of value because the stock goes from 20 cents a share to $2 a share. Still, it’s only $2 a share but it’s up 10 times and whoever has been promoting it is selling into the strength. It’s much more predictable.
It’s sometimes good to buy scams. A lot of people will get freaked out. It is like the first day of a scam. I’d say, “I just invested $50,000 in a scam.” They are like, “Oh my Tim. You’re crazy.” I say, “No, if it’s a scam, then it should do well for a few days, and they often do.” You just have to try and understand that all of the Penny Stocks are manipulated but you can use that manipulation to your advantage legally. I know it sounds fishy but it’s not.
Different industries and different sectors perform better at different times. When oil is high you may see these promotional mailers about a ‘national oil crisis’ where a company has just found a billion worth of oil and crude. When gold is high, they may say they just found a giant lot in Colombia. With biotech, if there’s a salmonella poisoning somewhere in America, they will use that. It pretty much depends on world events and just the trend, but all of it is bullshit, every single thing.
That’s the beautiful thing, if you see something being promoted about this amazing oil find, it’s bullshit. If you see an amazing gold find, it’s bullshit. There are a lot of people who are very scientific. They show maps. They buy oil fields for like $20,000 that are next to the oil fields worth a billion and they say, “Look, we’re right next to the billion dollar oil field that is owned by X’s son. This one could be also.” They play and they prey on the ignorance of suckers. There are new suckers born every day.
The technology, the oil, the gold, that’s all BS, but biotech, every now and then, they hit a home run and you’re betting against the stock at $2 and it goes to like $20. That happens once out of 100 times but it’s still happening versus the other one.
If you look at, probably I have 6,000 blog posts, probably about 1,000 of them are exposes. Out of those 1,000, 998 of them have failed. The only two that haven’t failed are in the process of failing. I’m not wrong. It’s not a debate whether it’s a scam or not. It’s just a question of when it’s going to get busted.
Remember I turned the $12,415 into $1.65 million pretax within four years during my senior year of high school and college. Then I started a hedge fund my senior year of college where I basically had $1 million post tax and then I raised $1 million from friends and family.
I eventually lost a third of my money in this company. Losing a third of your company as a hedge fund basically kills all of your credibility. So over four years of my hedge fund, I was up 20% per year before this investment. Afterwards, I finished up 2% per year, which isn’t that good.
The other guy was like, “I lost a lot, not that much” and wouldn’t talk about it. So my big mouth got me on this TV show. I ended up going from one episode to starring in five of the series episodes which is now in 20+ countries. I’m actually working right now with two different TV producers on potential shows. That helped me decide to close my hedge fund because I started getting 20, 30, 50, 100 emails a day from people saying, “Hey I saw you on TV. I want to learn how to trade. I want to turn a few thousand into a few million too.”
I lost $180,000 before. There was this company Taylor Devices (TAYD). It’s still in business. The stock went from $1 to $6 back in 2004 in a day roughly because the Asian Tsunami, and this company makes earthquake absorption equipments so everyone was speculating on message boards that this company was negotiating with Asian governments to put their earthquake absorption equipments on all these buildings. This was total bullshit because the company was near bankruptcy and I exposed it. I talked about it but the stock kept going.
At that point, I was already a millionaire. I’ve been a millionaire since age 22. So I’ve been a millionaire for a decade. That’s nice but at the time I was barely a millionaire and when you lose 10% of your net worth in a day or 15%, it makes you conservative. So now, I’m much more conservative. Those were my crazy days. Now, I make about $30,000 in a day but I don’t bet that big anymore because now I’m focused on teaching.
The good news is that for trading, you need money to make more money. I’m making money but I’m also paying a ton of taxes so I’m keeping the money in the account. It was very good for me that I wasn’t able to spend a lot. My biggest splurge when I made my first $100,000 in one weekend was taking my entire college dorm out to dinner. It was only like $800 because no one could afford alcohol. We’re all freshmen. I was at the right place at the right time.
I’ll trade maybe a few times a week. I just take advantage of opportunities. I’m always ready. I have my finger on the trigger at all times like a sniper. I do a watch list every morning for my students to prepare to know what stocks are hot today, new videos to prepare my students and to prepare myself, but I only want to trade good opportunities and that comes when there’s a big promotion going on, earnings, or contracts being announced. I’ve done 2,000+ trades over the years but before, I used to trade every day. I’ve cut back because I really want to value my time. I’m a big believer in enjoying life. I usually trade maybe 2-3 times a week and that brings me roughly $300,000 a year in profits over the past few years. I can make more if I traded more. I could probably make $600,000 but then I would make far less from teaching.
A lot of people are just like, “Oh you just make your money. Laugh all the way to the bank and don’t talk about it.” But as someone who is a teacher, as someone who is trying to teach this boring subject, how do you get people interested? Wait, you can become a millionaire too. Most of the photos I post now are just of me having fun – going to Italy, throwing my $50,000 party, driving my Lambo, getting this mansion, working from anywhere.
I spent two weeks in the Maldives recently. I took 13 of my closest friends, business partners, and students. These are things that people would want to do so I use them as like a carrot to get people in. Does it turn people off? For sure. People are like, “why aren’t you only talking about your trading strategy?” I already did that. I’ve done 140 hours of specific technical video lessons which most are free to watch, but there is only so much technical content that I can create.
If I do a post on my blog about a good stock and spend 45 minutes explaining every single indicator, versus posting a 2 minute video of my $5 million mansion. Guess which brings in more students? 10 to one, mansion over technical, I still do the technical video once you’re a student but unless you’re a student, you don’t get any of that.
That’s what you should be doing. You should get the knowledge out there. Unfortunately in my industry, if you’re very successful at trading or investing, you don’t tell anybody how. You do it for yourself. You do it for a few wealthy elite. That fucking sucks. That’s why you invented the hedge fund industry that can almost take down the entire American economic system with one failure, long-term capital management. So you have this fucked up supply demand balance. I’m going to do everything I can to get the word out.
Covestor was a website that basically taps into your brokerage account and verifies all your trades. As a teacher who is trying to say, “Look at my strategy, look at me,” it’s a very good tool to validate yourself if you’re good. After two years, there were 60,000 traders who signed up. I was number 1 because I went back to $12,000 to show that I could do it again in 2007, and that $12,000 had grown into $200,000. Just the fact that I could go from $12,000 to $200,000 in roughly three years again, showing every trade where students could follow it in real time, see videos, and see the blog posts; that made me number 1 and that gave me crucial, crucial validity and credibility. At one point I was like, “Look at my ranking. Don’t take my word for it. Look at Covestor. Compare me to everybody else.”
It’s just about transparency. That’s why my business succeeds. Covestor was the first stop but I’m all over Facebook, Twitter everywhere showing free picks, showing premium picks, and most of the time, I hit.
I’ve never seen an autotrader millionaire, I’ll tell you that. A lot of people have claimed to have made millions but I have never met anybody who has made millions off autotrading somebody elses strategy. I’m a big believer that it’s also not just about the money. It’s also the self sufficiency. I want my students to learn. I have over a dozen students who have made over $100,000 with my strategy but they are all self sufficient. After what they have learned in a year or two, they don’t need me. I’m just their training wheels. I think that’s infinitely more valuable than if they just autotraded and have made $100,000. They still would have no idea what to do. Now they can go off on their own.
One of my top students has made $600,000. I haven’t created a millionaire yet but he has made $600,000. He didn’t even come to my conference because he is off playing golf. That‘s fine. It’s kind of disrespectful but I’m disrespectful so I appreciate that.
Profit.ly is my version of Covestor. When Covester started getting into autotrading instead of just focusing on tracking as many different bloggers and traders as possible, I was like, I still want to track. So we created Profit.ly. Obviously it’s biased because it’s my website but you could see all my trades. I upload them and the beautiful thing is that instead of just tapping into one of my accounts like Covester did, you see all of my trades across all my accounts. We integrated my newsletter, my chatroom, and everybody else’s chatrooms so now there are 21,000 members in just a over two years. We’re competing against to see who is best and it’s not based on percentage.
We changed that. We integrated it with the newsletters and the chatrooms, and now we basically have this crowd sourcing newsletter movement where out of 20,000+ traders, we pick the best. I think we have 15 newsletters now of the best traders and they also teach. You can see their trades. They have their own chatroom. They do video lessons. Some of them do webinars.
For example one trader has made $1.5 million over the past two years so now if you go to Profit.ly/iu, and you can get into his chatroom. He does webinars and video lessons, and you can learn. It’s not just my strategy. It’s others, and next year, who knows, we’ll have 100 top traders so we’re just growing. I’m not a one-man operation and that’s why a lot of my Profit.ly employees are down here in Florida.
Well you have to learn it. We’re not Covestor. We don’t autotrade so you have to watch the videos. I have 800+ video lessons and it just keeps growing every time I do more trades. I have selected 30 of the best ones. I have 12 DVDs. You could probably get away by watching the top one or two videos Penny Stocking and Penny Stocking part 2. Everybody learns differently. I blog post, I do private coaching. I do webinars so it’s about you understanding the catalyst, the news, the pump and dumps, the earnings, the contracts, and the brokers. There is free stuff everywhere especially on TimothySykes.com. My website is totally free.
Investimonials is like Yelp or Trip Advisor where you can review brokers, financial software, financial websites, you can review my DVDs, different newsletters, and different blogs. You can review Jim Cramer, commentators, everything related to finance. I thought it was going to be a cute little side project. We’re up to over 10,000+ financial products and categorizing everything so it’s very useful especially the broker reviews because there are not that many out there. The software that we’re developing called StocksToTrade.com is actually coming out in the next few months and it’s going to create our own charts.
We’re going to pipe in my alerts and watch list so it’s mainly for my subscribers and then for other so called ‘gurus’ who want to deliver useful information with their subscribers with moving charts and everything. We have been working on that for six months. I have a lot of projects mainly just focused on transparency, giving better value to traders, and blowing up the bullshit industry that I’m in because there are so many snake oil salesmen who are like, “Oh I turned a few thousand into a few million.” Well, show me your trades. Show me that. I encourage everybody. There are quite a few people who claim to have made billions and now they are selling their strategy. If it’s so good why are you selling it?
The reason why I’m selling is because I was on TV and this is a damn good business, and guess what, I show every single one of my trades. What’s your answer? That’s what I love. I love exposing scams. It’s not just about the money. I love changing the industry for the better. That’s what really drives me every morning.
Teaching. Trading is a high. I don’t know if you know any traders but we can have very addictive personalities and you want that high. I made $100,000 freshman year. I had acne face. I couldn’t even get a girl. My fake ID was taken away. I was a loser and made $100,000 in a weekend. It opened my eyes to what’s possible. I wasn’t rich at that time. At that time, I had gone from $12,000 to $175,000 and I had made roughly $100,000 on my $175,000. So I made over 50% in one day.
But when you get that kind of confidence, you want that high and so now, I’ve had that high now. If I make $100,000 on a trade, sure, it’s great but I have done it, I don’t know, a dozen, two dozen times. If one of my students makes $100,000 for the first time or the second time, I envision the high that I use to get because now they are getting it. Because I have taught them to get that self-sufficiency, to get that feeling, Maybe it’s just their first of second time but there will be more times, eventually, the high phase. By transferring it to other people, I was reborn. It’s beautiful. I love teaching.
That’s a good question. I actually had my third loss in a row in the past week. I lost roughly $8,000 but this was after me going two months without a loss and making roughly $25,000. If you look at the last two months of my trades, I’m still up roughly $20,000 or $18,000. I don’t know the exact number but I’m still solidly up. But pretend I didn’t have any gains and I just had three losses in a row. How do I recuperate? How do I recover? I’ve had losses before. I’ve had $180,000 losses. So $8,000 in losses doesn’t really matter. My number one rule in all my DVDs, video lessons, blog posts: cut losses quickly.
Every single loss that I take encourages me. Not only because I do a video lesson which helps my students but because when you do something wrong, now you know what not to do. You’ve learned. If I can go back in time, I would have held that scam one more day and made $30,000, but I can’t go back in time. All I can do is learn from it and teach from it. When you’re on the right path, that’s fine. If you keep having losses endlessly for five years, okay, maybe you shouldn’t do that. Maybe you should get on something that’s more successful. But I would encourage people to try everything. Try different strategies, try different industries. I didn’t know that I would make a lot of money getting into teaching. I was running a hedge fund. I was depressed because of my friend’s father’s company which had lost 30%. I was still a millionaire but barely and my credibility was shot.
People are very afraid to lose. People are very afraid to fail. I’ve failed rather spectacularly. If you Google “Party’s Over for Hedge Fund King” that was a New York Post article when I got in a fight with that magazine editor and I didn’t know how to deal with the press. He thought that I was losing my money because the success of the TV show had gone to my head. He failed to read the complementary book that I had sent him so he didn’t even know my hedge fund was failing before my TV show even aired. I just put on a happy face for the TV show because I knew that it wasn’t my core trading strategy that made me lose. It was veering away from it.
I’m a very good trader. I’m a very shitty investor. This is what I’ve learned.
You need $2,000 to be able to short sell and be able to bet against companies. One of my student’s name is Jarmall. He is still in college and a single dad. He has a part time job and he invested $500. He is up to $41,000 in profits this year. Since he started with $500, he could only buy stocks. It is possible. I would recommend having at least $2,000.
You really need to study. Even before opening an account, I would suggest watching my videos. I have over 700 video lessons. I show the 30 best in a blog post. It will cost you $99 to subscribe and you get all these 30 video lessons and you get 700 more. There are some of my students, they are literally just watching these videos nonstop.
The main thing that you guys should really take away is that whether it’s internet marketing, FOREX trading, or Penny Stock trading, because of the world, because how fast the internet is everywhere in the world, but if you learn these kind of undiscovered industries, you can make so much money from anywhere in the world. I hate it when people say, “I can’t trade. My parents want me to be a doctor or a lawyer.” Those industries are crowded. Everybody wants to be a doctor or a lawyer. You have to study 8-10 years before you can even get your degree and then you’re not even guaranteed income. You’re also in debt for years just paying back your education. It fucking sucks.
With this stuff, you can literally become a master within a year or two. The learning curve has increased. The rewards have increased. The independence is increased and I just want more and more to realize that. I think it’s fantastic. We’re at a very special time in history more people should realize that.