How does one purchase OTC Stock?

3/8/2002 | Rocketman

[Rocketman]

As some fellow freeepers are aware I've been messing around with a few stocks for the last six months or so.

Generally I look for complete dogs (Providian, enron, K-mart) stuff in the dirt that is in my estimation to big to go away.

I'm happy to report that Providian's on the mend and I'm making a little money :)!

I have my eye now on Williams Communication (WCG) which was delisted a few days ago. On their website they say their stock is now being traded on OTCBB (The Over the Counter Bulletin Board) with a change of symbol to (WCGr)

I went to OTCBB and while I found WCGr -- I found no mechanism to make purchases with.

I might add that I belong to sharebuilder. As far as I can tell once a stock's delisted I can't use sharebuilder to purchase it.

Please suggest some inexpensive -- preferably online services I can use to purchase OTC stock.

Thank Yew

Richard

[Rocketman]

On a related note I posted a thread a few days ago about building a forum for the city of Fairbanks. Last night added a few posts on how the job is progressing along with the lastest problems I've run into.

See ya later --

[Dog Gone]

A broker can make the purchase for you, if you are insistent on purchasing that particular stock which will be trading at $0.00 shortly.

[winin2000]

As a broker by profession I can tell you that any brokerage house or bank that has an in-house broker can perform the trade.

Candidly, though, the main advantage to a conventional broker is to have access the recommendations of their research department. Since you're obviously doing your own research, and if don't mind gambling on your own ability to pick'em, your best deal is to go to Ameritrade or Etrade to take advantage of their cheap trades.

[Chemnitz]

I like Ameritrade...most of my picks are up quite a bit. And I pick dogs at the bottom. I got very tired of smart aleck brokers who seldom tell the truth.

[Southack]

"How does one purchase OTC Stock?"

Old joke:

With someone else's money...

[Barnacle]

How's this? I'll dig a hole for you to throw money into and won't charge you a thing. And, even better than buying OTC stocks, I'll give half of it back to you when you decide you've had enough.

[JoeFromCA]

OTC stocks as a category aren't necessarily a bad bet; that's actually what the Nasdaq was before it went electronic and adopted a fancy name. However, you're absolutely correct that in the dump stocks are likely to sink even further into the dump (there's a reason they're selling for pennies).

As an aside, IMO buying individual stocks is a fool's game, or at best a rich man's hobby. To make real money in the equity markets, as I have over the past 19 years, the best rule is: buy and hold index mutual funds.

[DallasMike]

As an aside, IMO buying individual stocks is a fool's game, or at best a rich man's hobby. To make real money in the equity markets, as I have over the past 19 years, the best rule is: buy and hold index mutual funds.

You're right that index funds are generally the surest way to make money if you want to hold mutual funds. However, individual stocks will usually outperform index funds if common sense is used to pick them. I follow Peter Lynch's precepts of buying good, solid companies that everyone is familiar with, like Procter & Gamble, Johnson & Johnson, Home Depot, Coca-Cola, and yes, even Microsoft. You're unlikely to find a 5-year period when stocks like those won't beat the market.

[antaresequity]

Cheap stocks are just that: Cheap (Junk)

Want to buy some WEBVan?

[antaresequity]

However, individual stocks will usually outperform index funds if common sense is used to pick them.

I personally trade futures contracts: Index, Gold, Currency, Oil and Soybeans...so stocks aren't my thing...but your right about this...and In my humble opinion...Investors Business Daily backed up with sound technical analysis that focus's on medium time frames will put you a million miles ahead of your broker, funds etc.....fwiw

When one begins to feel more confident in their selections, they would be well advised to learn about options...both as an investment vehicle for their limited risk and leverage potential, and for use as a hedge. In fact right now you can buy short options for almost nothing to protect downside risk to a portfolio....again...fwiw

[HockeyPop]

Sounds like your trading of penny garbage/in-the tank stocks is more of an amusement than anything else. Find another amusement. I day traded everything for two years during the height and during the hemorrage of the internet bubble. I once traded the same stock 125x in one day.

When all is said and done the best strategy is to dollar cost average, be diversified and don't get greedy. Nothing wrong with collecting rent and living well below one's means either.

[JCG]

I have some shares of Rekcus, Inc. (symbol RU12) that I'd like to unloa ... sell -- cheap.

Interested?

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Download 8 Mb zip file here (60 minute video)

[GovernmentShrinker]

The problem with your investment strategy is that, as far as distressed or bankrupt companies are concerned, equity is the LAST place you want to be. Just because these companies don't "go away" doesn't mean their stock won't go to zero. What usually happens is that the holders of senior bank debt and bonds, who cannot be fully repaid, are given the equity -- all of it. The shares issued to them are usually new shares (with the original ones being legally cancelled), so just because you see something trading as Enron stock down the road doesn't mean that the holders of its original stock didn't end up with zero.

If you hope to have any success at amateur vulture investing, you need to comb through SEC filings with a microscope to find out which of these companies' debt is being bought by the handful of world-class vulture investors (mostly hedge funds, which are quite adept at concealing their holdings). Then, if any of their positions are in securities which are available to individual investors, try to get some of that (you'll be out of luck on the bank debt, however, as it is not available to individual or even to small institutional investors).

Don't be fooled if you run across top vulture funds buying equity of something like Enron. They are almost never buying it for its investment potential; instead they are buying it as part of a strategy (based on the intricacies of bankruptcy law) to influence the bankruptcy proceedings, so as to enhance the ultimate value of their OTHER positions in the company's capital structure. Good luck, and only use money you can afford to lose on this strategy -- it can be fascinating, but you're up against professional competition that makes Warren Buffett look like a two-bit mutual fund manager.

[Tauzero]

"To make real money in the equity markets, as I have over the past 19 years, the best rule is: buy and hold index mutual funds."

A reasonable strategy for the past 19 years. Well, at least until 2000.

[SteamshipTime]

Generally I look for complete dogs (Providian, enron, K-mart) stuff in the dirt that is in my estimation to big to go away.

Rocketman, nothing is too big to go away.

[dware]

Interesting. I go searching the net to find the same exact answer, and find it here at one of my favorite places to hang out.

Fascinating.