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pennystocks and the psychology of their investors.      6-Nov-09 11:43 am    
AZC is a nice play. Its also one of many many many microcap/pennystocks (pennystock being a loosely defined term for me) with fundamentals that are purely the prospects of future earnings and growth.

Probably the most famous growth investor was Peter Lynch, who often had a knack for picking startups that became 20 baggers or better. But he was also highly diversified, with most of his highest $ gains, in companies like Ford, GE, Volvo, Fannie Mae... hardly speculative companies (at least in the 80s). He had hundreds of positions in smaller companies, never fell into the easy psychological trap living/dying with current positions.

Too many investors... over-research their one or two 'great story' positions rather than create a valuation system/risk management system/guideline that objectively screens the good and the bad and perhaps even dumps the good when they fall 5-6%, to avoid excessive risk, and then plan to get back in later. Of course, few have the time/ambition to create such 'systems'.

Go to every other pennystock forum on yahoo and there is exists a core batch of 'captain' investors who suffer over the price movements of their 'good story' position. Some of these investors are involved in the dirtiest, most shameless of OTCBB/Pink sheets companies and still cannot see the red flags. Read these forums and feel better, maybe even find the compulsion to "avoid" being 'these guys'. Its the same pathetic crap: "shorts are manipulating again." "analyst X loves us, he's legit but analyst Z thinks this company is a fraud, he is a clearly a short!" "news is coming soon, price up 5x!" They take zero responsibility.

It's sad, isn't it? Luckily AZC isn't a biotech. :D

I'm just rambling - hate to see fellow investors feel down. It gets me down a bit too. FWIW, I own shares but likely very few compared to you guys so its easier for me to say all of this.
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Augusta Resource Corp. (AZC)

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