I’ve never invested in Penny Stocks, but after talking to Timothy Sykes, a guru of penny stocks and some may even call him, the King of Penny Stocks, I now believe I can successfully trade in the penny stock world. Even better than talking with Timothy Sykes is subscribing to his Profit.ly newsletters or purchasing his DVDs. For what you may profit, his instruction via newsletter or DVD is well worth the price.
Timothy Sykes turned $12,415 in bar mitzvah money into $1.65 million by trading stocks. Timothy then began and folded his own hedge fund and wrote a book about his experiences. My interview with Timothy Sykes is finally here.
Here are just a few of Tim’s endeavors on the internet. He has his own TIMTV channel on youtube, created a new website which reviews stock websites and those who give advice, it’s called Investimonials.com. Tim has Bullship, a publishing company that sells his instructional DVDs and his book an American Hedge Fund. Not to mention his blog is constantly updated with great posts and every one of his trades are documented on profit.ly.
Tim was gracious enough to give me some time to answer a few questions. Enjoy the interview.
Tim, you’re all about transparency. What drives your need to be authentic and your call for others to be the same?
The fact that the industry is so against it. When I launched Investimonials and I launched Profit.ly, not one financial company was excited, not one financial company wanted to partner. Every single company we talked to was scared of what customers would say on Investimonials. They’re scared to post their trades on profit.ly because it’s rude to talk about how much money you made, you don’t want tax problems. There’s so many excuses. And I said, F*#K all of you because transparency might not be the most pleasant experience, but it’s what this joke of an industry needs.
I totally agree about authenticity. That’s so extremely important to this generation.
Yeah, you can be anybody on the internet. You can have multiple screen names. You can say you’re profitable when you’re not. All it comes down to is who is real and that’s the future. Other people are in this to make a lot of money quickly and retire. You have a bunch of scam artists, not just in penny stocks, but trading, and teaching trading, so that’s why I cut through all the bulls#!t.
All your trades are detailed on your website and through profit.ly. But to make it easier for my readers who might not want to read through two years of trades, can you list some of your most profitable trades over the last couple years and your worst trades?
Yeah, sure. Understand first of all that I trade very differently now that I’m a teacher because I used to go all in. I used to put 75% of my assets to work on one play. Now I refuse to do that. Not because I don’t want to but because I know that there are others who look up to me. And if I start doing that, you know, it’s no different than, like a celebrity beating his wife and other people thinking that’s okay, that’s acceptable behavior.
I trade very conservatively but I have had some big wins and some big losses. I’ll start with a big loss. The other day I was shorting Royale Energy (ROYL) up in the 5’s because it was up from the 2’s and I thought it was ridiculously overpriced. But I broke my own rules. In my DVDs I say trade oil stocks very carefully and that goes double when there’s violence in the Middle East. I took a too large of a position. I took a $125,000 position, which is roughly 15% of my assets in this one play. Oil started surging and I only lost twenty cents a share but that equaled $8000 and I think that was my worst lost of 2011 so far. But it was a good loss because the stock actually went up to over seven. So I would have lost over $60,000. It was tough, but you know, cutting losses quickly, which has always been one of my most important rules, saved me quite a bit.
For 2011 I’m already up $100,000 mainly because of one trade where I was shorting (WLOC). It is a one man pump and dump. It’s valuation got all the way up to 200 million dollars because of a lot of email promotional mailings. But if you actually read the SEC filings like I did, you’d see it’s just one man. He works 15-20 hours a week. He works out of a Regus office rental for $249 a month. The company has no other employees, no cash, no revenues. It’s all a big pump and dump. I shorted that stock at 60 cents. It was up from 10 cents on the pump. At the end of the day it collapsed. The biggest thing when you see pump and dumps, is to be there for the collapse. I was there for the collapse and I was short 120,000 shares and I made approximately $31,000 that day while I was driving down to Florida. I wasn’t even prepared to trade that day. I had to stop off at a gas station which had WiFi. That was a pretty memorable trade.
That’s the kind of trading I do. Even when I screw up and lose $8000, but then I made $30,000. The gains outweigh the losses.
Seems like you get burned when you go against your own rules….
Always stick to your rules. But it’s tough because we’re all degenerate gamblers so we have to fight our degenerate nature.
Have you ever become emotionally attached to a stock?
Ah… yes. I’m emotionally attached to stocks, to girls, to neighborhoods, to restaurants. I have a very addictive personality and it is not good. It is not healthy. I think stocks and girls are probably the worst two of those.
Do subscribers to your newsletters and videos get real-time alerts to what you’re buying and selling?
Yes. They vary by the subscription. Because there are a lot of subscribers that have different wants. We have a daily watch list that comes out pre-market. For some subscribers, we have an upgraded plan with more features where you get potential trades, where each day, I’m like okay, I’m looking at (COOL) Majesco Entertainment. It’s a potential buy during the day. Then they also get the alert when I do buy it, within seconds of my actual trade. Same thing with my exits. You see exactly where I sell or where I have a stop-loss. So in short, the answer is yes, they get realtime alerts and watchlists and research reports, each newsletter has a different strategy.
Can you give a couple examples of some success stories of those who have subscribed to your Pennystocking Silver, Gold or Pro plans or who have bought your DVDs?
Yeah, one of my top students is named Michael Good. I met him because he wrote a blog post called, “Timothy Sykes is full of S#!T” and I disagreed with that blog post and we went back and forth. I won him over and he has pretty much all of my newsletters and DVDs. Altogether, which only costs, like if you want everything only costs $6000. And he’s up $250,000 now. That’s a nice return. There’s also this other guy Greg. He’s number one on Profit.ly (as of this interview). He actually just beat me on Profit.ly as the number one trader. He’s now up two and a half million and he has all my DVDs. He knew trading before me. So I didn’t teach him from scratch. But he never knew about short selling penny stocks so I added that to his arsenal. On my strategy alone, I think he’s up about $500,000 in about two years.
Those are two of my biggest successes. There’s lots of people of between $50,000 and $100,000. And a ton of people up about $20,000. It’s not a big money game. I’ll never have people that are up 5-10 million. It’s more trying to make four, five and six figures.
You probably have some enemies on Wall Street. Has anything ever been more than just words?
No, you know, I find that most people are pussies when it comes to real life, but I’m a pussy too (laughs). It’s just that it’s all a war of words. I’ve got a few cease and desist letters, I got one from Shaquille O’Neal when I called his stock a pump and dump. But it was and he went away and the stock dropped 99% and I never heard from him again. Sponge Tech, which was a pump and dump, I exposed them and they didn’t like that. They were supposedly going to sue me. They put out a press release, but I never got served and now, their two executives are on trial for fraud, larceny, obstruction of justice. So I find, all I have to do is honest research and use publicly available information and then I could pretty much say whatever I want under the first amendment. It’s quite nice.
On a persona note, how do you relax and how do you find time to do it? And what about trading when you take time off?
I don’t take time off. That’s probably why my relationship with my ex-girlfriend ended because she got fed up with my 16-18 hour days, and she’s probably right but, I just love it. Last year I made around a million dollars blogging and trading and teaching but seven months of the year I was overseas, Greece, Italy, Nepal, the Maldives and I’d just bring my laptop everywhere and I’ll tell you, it’s not good internet in Nepal, so I wouldn’t go back there, but, trading from Italy and Greece, I mean, the time zone, instead of waking up at nine in the morning, you can wake up at 2:00 p.m. It’s f*@#g beautiful. So I highly encourage people to go to Europe if they can afford it and trade from there, and blog from there.
(With a tinge of sinful envy) It does sound like quite a life.
Yeah, it is interesting. But you do have to understand that there is no time off. I mean the number one reason why I do so well trading and teaching is that I’m just consistent. A very smart teacher of mine said, “Fifty percent of the battle is just showing up” and I show up every single day, rain or shine, no matter how I feel. Even if I’m drunk, I write a blog post saying I’m drunk; you don’t want to take any stock alerts from me. And that comes down to transparency, honesty and more importantly, just telling my subscribers what’s up, because they can relate. It’s not like my subscribers never get drunk. Or sometimes I close out a trade because I’m just exhausted from working too hard so I say, “Hey, I’m closing out this trade, not because I think the stock is not going to do what I think it will, but because I’m freakin’ exhausted. I think my subscribers can relate to that, not because they’re such hard working bloggers, but they have full-time jobs, they have kids or relationship issues, or they’re traveling, so you know, if you tell people what happens and show them how life can get in the way of trading, it helps them.
If someone would wave a magic wand in your direction and you could no longer trade, talk or teach stocks, where would you channel your creativity and marketing talents?
I don’t know. That’s a good question. I love online media. I love the transparency. I’d probably go work for the SEC and make the SEC into a social media giant because I think that’s the way to really shut down frauds and cut down on the corruption. If the SEC wasn’t too busy watching porno videos all day, they could create a massive social network where there’d be whistle blowers galore and the industry would self-regulate. I think I would do that if I wasn’t into stocks. I still might do that afterwards. Now that I’m saying it out loud, I think it sounds pretty good.
Can you tell our readers a little bit about Penny Stock Millionaire?
I’m finding that lots of different readers and lots of students have different time frames and different goals. I have this thing called The Tim Trading Challenge which is private coaching and group mentoring. I created Penny Stock Millionaire for people who like penny stocks, they like the volatility, they like the corruption and the stories I tell, but there’s too many trades and you have to be at your computer all the time to take advantage of stuff. Penny Stock Millionaire is a longer term trading strategy. It’s basically the same patterns, the same companies with a one week to three month outlook, trying to make twenty, fifty, one-hundred percent gains on swing trading, sometimes even investing. If there’s a nice new play, I’ll try to hold it. I think this is going to be good for me too, because I have patience problems. I think this is a nice new newsletter to try to teach me a little more patience.
I’ll give you an example. I shorted Quepasa.com (QPSA) at $14.60 because it had been pumped up, called the Facebook for Latinos which is overly simplistic and the stock had gone from like $11 to $14 on that. So I shorted at $14.60. I covered in the 13s the next day. But I was inspired to write an entire research report that night because I had started doing digging and this company was very sketchy. 96% of revenues came from one of their directors who happened to own 40% of the company. It was a massive conflict of interest. To make a long story short, I made roughly $1.00 a share on my short because of shorting based on technicals and short term catalysts but now the stock has dropped all the way to $6.00. So it’s a 60% win in a month and I didn’t capture any of that because I didn’t have a newsletter or the outlook to actually short it long term despite my research.
So Penny Stock Millionaire will be for those kinds of opportunities where it’s more than just trying to make a $1 or $2 a share. It’s more long term calls. It will be focused on good investments because there are good penny stocks out there.
For people who are not market pros, you short many stocks you describe as pump and dump schemes. What is a “pump and dump?”
It’s when somebody gets shares very cheaply, either an insider, a lawyer, a consultant, a basketball superstar like Shaquille O’Neal and they use some kind of manipulation and marketing, and it’s not always illegal because you can send out promotional mailers with a disclaimer on how many shares you own or how much you got paid to send out these ads. You basically pump up the stock price so that you can dump your shares. And that is kind of illegal. There are obviously legal lines where you can cross if you have a disclaimer vs. not having a disclaimer. Penny Stock chaser was one pump and dump which was shut down. Their disclaimer said, right as they were sending out buy messages, “We may sell our positions at the same time.” It turned out they weren’t just may be selling, every single email blast they sent out, they would sell within seconds or minutes of the email blast going out. They were professionally manipulating stocks by selling their shares and telling others to buy. That’s an illegal pump and dump.
See who’s pumping and dumping penny stocks today
Finally, is there one thing you can share with our readers that nobody else might know about you?*
* This interview was done the day of the Japanese earthquake, before radioactive waste leaked into the ocean.
That’s tough for someone who’s completely transparent. I think I’ve said pretty much everything about me. I’ll tell you this, my favorite experience in the world is going to the Tsukiji Fish Market in Tokyo, Japan, the largest fish market in the world and eating fresh sushi at four in the morning, that’s when it opens. I would trade my entire blogging life, my entire student base and trading profits to be able to do that every single day, but I can’t because the time zone in Tokyo sucks for the stock market. So… that’s my dream.
Thank you Tim for an awesome interview!