Stock trading tips on hot stocks to buy now, stock market strategy, picking hot stocks, picking penny stocks, and how to buy cheap stocks. From “How to Find a Home Run Stock” and “How to Pick Hot Reverse Merger Penny Stocks” and also “How the Shorts Raid Your Stock, Destroy Your Company and What to Do About It” all by John Lux.

1. Hottest Penny Stocks – Part II
Hot Penny Stocks to
Watch

2. Disclaimer
Stock speculation is very risky
Do not trade with more than you can afford to
lose.
Seek professional investment advice.
This is not investment advice.
No warranties, you are on your own.
This is not suitable for all investors

3. Penny Stocks to Watch
My favorite type of penny stocks to watch are the
public shells that can be used for reverse mergers
A reverse merger is when a private operating
company is acquired by a shell (non-operating)
public comapany.
This is done so the private company can go public
fast.

4. Reverse Merger Price Jumps
With the merger, the shell may go from a small
market value to a large market value in a few
months
For example, the shell may have a market value of
from $100,000 to $500,000
The shell shareholders get to keep usually 5-20%
of the new merged company
The merged company may be worth millions

5. Hypothetical Jump in Value
Do the math, if the shell was worth $100,000
The operating company is worth $10 million
Then the value of the merged company should be
more than $10 million
So if the shell shareholders keep 5% of the total
new, merged company, they have stock worth
$500,000 or five times their original investment

6. Reverse Merger Example
(chart courtesy of Stockcharts.com)

7. RMDM
RMDM was a speculative, sub-penny stock that
took off after a reverse merger
Huge profits were made by the original holders
Note that it went right back down again
For more such stocks see my YouTube video
“Hottest Penny Stocks Part I”

8. RISKY!
While large gains can be made by sophisticated
players in these stocks, they are very risky
Most OTC shells will not merge in a given year
They have little or no public information and
what is there may be incomplete, misleading or
even deliberately false.
Merger stocks tend to rise and fall FAST!
Never risk a lot of money in them

9. Where to find them
Reverse merger shells are found in the Pink
Sheets and on the OTC Bulletin Board
Pink Sheet shells may not be providing public
information
There is no subsitute here for educated, tedious
research
Experience and knowledge can pay large
dividends here – ignorance is expensive

10. Learn More
Subscribe to my YouTube videos
Subscribe to my blog
www. investing-performance.com

11. Read My Book on Amazon.com
How to Pick Hot
Reverse Merger Penny
Stocks

12. John Lux
Trader, investment banker, former
OTC Market Maker and attorney
Lux.Investor@ gmail.com
Copyright ©John Lux 2011