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Try Making These Extraordinary Gains in ExxonMobilBy
Saturday, June 13, 2009
Venoco, a tiny "microcap" oil company, has soared 214% since late February. ConocoPhillips, a major U.S. oil producer, is up a fraction as much: 14%. ExxonMobil, the world's largest public oil company, is only up 3%.
The difference comes down to something I heard from legendary commodity investor Rick Rule. Rick is habitually right on everything... He's an extraordinary money manager (and CEO/founder of top commodity-firm Global Resources), so I always sit in on his presentations. One thing you can count on with a Rick Rule presentation is that he'll hit his audience with an incredibly important question: "Are you an investor? Or are you a trader?" You see, most folks get the two confused. They think they're long-term buy and hold investors, then they go out and buy speculative assets that should only be held for weeks, months, or at the max, just a few years. They get involved with assets they just aren't prepared to handle. They don't stick with large, safe companies. Some people have it right, though: They know they are traders. They don't buy Intel or ExxonMobil expecting to make fast gains. They know about stop losses and position sizing. If you're one of these people, it's vital you understand what a microcap stock (aka a "penny stock") is. "Microcap" means different things to different people. But just remember it's generally a company with a market cap below $500 million. To get an idea of how small this is, realize Google is 272 times bigger than a $500 million stock. ExxonMobil is 726 times larger. Microcaps are a good friend to the trader because they can make huge moves in short periods of time. It's just far easier for a $200 million company to double or triple in price than it is for a $200 billion company. So the microcap space is a no-brainer place for a trader to operate in. Let me show you some concrete examples… I've been bullish on oil for the past five months. You could've bought a large oil company to play this idea... but the best trade – the "juice" – was to be found in tiny, microcap oil companies. So several months ago, my colleague Tom Dyson and I recommended the microcap oil firm Venoco to "beta testing" readers of our trading servicePenny Trends. Venoco has tripled their investment since our recommendation. Try making that gain in ExxonMobil or PetroChina.  As I mentioned, it's vital you know what stop losses and intelligent position sizing are before you venture into the microcap world. If you don't – or won't – use these tools, stick with larger, slower stocks. But if you answer Rick Rule's question with "I'm a trader!" venture here and you can make the biggest, fastest gains in the market. Good trading, Brian Hunt P.S. My co-editor Tom Dyson and I plan to issue at least 10 more Penny Trends recommendations that double in price this year. Some huge trends in commodities and stocks are developing now, and I'm sure we can make a fortune. If you'd like to see how these trades are made, I recommend you learn aboutPenny Trends. But hurry. The number of people in this service must be capped to ensure it's useful to our readers. We're almost out of spots. Learn how to reserve your spot here.
Further Reading:
These Stocks Rise Faster Than Any Other Investment Class in the World Market NotesGAS JUST GOT A LOT MORE EXPENSIVE
Our chart of the week is just in time for driving season…
To the right, we present the past year's trading in unleaded gasoline. It's a picture of what you're paying to drive right now. As you can see, gas dropped like a rock during last year's global asset crash. But like most commodities, gas is enjoying a huge rebound right now. The fuel has nearly doubled since January 1. The summer road trip just got a lot more expensive… – Brian Hunt |
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