Because nothing says rational equity markets like a 16-year-old penny-stock-day-trader who turned $10,000 into $300,000 this year…
Meet Connor Bruggermann – the new normal ‘investor’…
The son of a former vice president at JP Morgan who worked on the floor of the New York Stock Exchange, 16-year-old Connor Bruggermann could well be the poster-child for what the Fed has wrought on the American public.
As The Verge reports, while his dad warned that with penny stocks “you could make money or lose money very, very quickly,” Bruggemann, on the other hand, embraced the chaos. For Bruggemann, as for many others, penny stocks were another outlet for that risky reward seeking. “There is a lot of fraud and manipulation, a lot of them are not legitimate companies,” he says. “It could be someone like you or I sitting here saying we have a $5 million deal with Panasonic, when in reality that’s not true.” According to the SEC, penny stock scams have surged over the last two years.
At home, in a room he shares with his older brother, Bruggemann has two monitors set up as a trading station. But most of the time, he tells me, “I prefer to trade on my phone.”
Risk management…?
“I guess the rule of thumb is, when you invest in a penny stock, expect to lose every dollar you put in. So there is always that risk,” he told me. “There have been several times where I put every dollar I’ve had on the line, and fortunately it’s worked out almost every time.” He stops, then corrects himself. “Every time! Or else I’d have nothing.”
Not everyone sees this as a great success story…
“There are NO prodigies, just bull markets,” says Howard Lindzon, an investor and founder of Stocktwits. He encouraged me not to cover Bruggemann’s story. Other traders I talked to were much harsher. “It’s bullshit. Trust me,” said one. “This is being orchestrated by a penny stock alerts product; it’s a marketing scam.”
But don’t worry, you can get in on this too…
While the promises on Bruggeman’s website are far less aggressive than “Get rich quick” schemes like Sykes’, there is an element of self-interest in creating a watch list of penny stocks. “If someone is going to pay me for what I’m trading, I don’t want to get in at a penny and they get in at a penny and a half.” Recommending stocks you already own without disclosing that fact is at the heart of many penny stock schemes.
It’s worth emphasizing here that, while The Verge could find no evidence of Bruggeman pushing penny stocks to his followers in an attempt to pump and dump shares, the basic nature of his website is fraught with that potential. Bruggeman says he is careful to indicate which stocks he is in and alerts followers when he enters and exits a stock. For now, the community following his watch list of stocks is fairly small.
“We have 16 people it’s emailed out to daily. My Twitter is a little over 1,000. They don’t subscribe to me, but if I tweet, sometimes they will follow my plays.”
But even he is a realist…
…and maintains no illusions about the world he’s playing in. “The company I’m in right now, the CEO got arrested for embezzling funds. He stole $185,000 from the Girl Scouts, before this.” What he likes about this world is that he is competing against people like himself, mostly small-timers he feels he can beat. “[In] penny stocks, you’re playing against high schoolers. You’re playing Division III.”
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He keeps a copy of Michael Lewis’ new book, Flash Boys, on his dresser as a reminder that in their own ways, all markets have their unscrupulous players. Penny stocks are a risky game, he acknowledges, but “there is way more cheating on Wall Street.”
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via Zero Hedge http://ift.tt/122QFfK Tyler Durden