Today's article is about "dumb money" vs. "smart money."
Some of what I'm about to tell you may come as no surprise to
you... Some of it may shock you or make you a little
But hopefully by the time you're done reading today's essay
you'll understand why it's so important to have a firm grasp of
why markets sometimes behave irrationally and how it causes so
many investors to lose money. And perhaps more importantly,
alongside the "smart money"...
But before I get to all that, let me share with you an
interesting story that caught my attention a few weeks ago. It's
about a little-known stock that gained a mind-numbing 23,000% in
a matter of weeks.
It's the perfect illustration of the kind of insanity that
routinely takes place in markets -- especially when it's
continuously charging higher. And as I'll explain in a moment,
this kind of market madness certainly isn't new.
The pinnacle of market-madness
If you haven't heard of Cynk Technology Corp, don't feel bad. In
fact, that's probably a good thing. Only recently did the company
begin to attract headlines in the financial media -- and for all
the wrong reasons.
Initially to some investors, Cynk Technologies might have
appeared to be another run-of-the-mill social media IPO. Its
purported unique take on social networking, according to its own
description on Yahoo Finance, is to connect social media
"seekers" with "mavens" (i.e. celebrities, industry contacts,
etc.). Users would pay a fee through its site, "IntroBiz," and
would facilitate an introduction between the two parties.
There was just one problem.
Cynk calls itself a "development stage" company. It has a
grand total of one employee, no corporate website, no revenue
from the past three years and a grand total of $39 in assets.
It didn't matter that its total assets weren't worth even a
tank of gas. Through relentless (and probably fraudulent)
promotion, enough buzz was created around the stock that
investors (I'm using this term loosely) were duped into chasing
this worthless stock higher...
The result? What was once a stock trading at six cents a share
became a company with a $6 billion market cap trading near $15 a
The folks at the financial blog ZeroHedge were the first to
bring this story to light. They put it best when they called what
was going on with Cynk "pure madness." Since then, Cynk
Technologies has caught the eye of Business Insider, The Wall
Street Journal, CNBC and others, who have all commented on the
lunacy of what happened with the stock.
Luckily, trading was finally halted just a few weeks later on
the over-the-counter exchange where Cynk's shares were traded
after all of the press surrounding this story caught the
attention of the Securities & Exchange Commission.
We've warned about the perils of chasing the latest market
trend before. Back in
, we talked about the second "dot-com" bubble happening in tech,
particularly in social media. The story of Cynk, unfortunately,
is yet another extreme example of the kind of ridiculousness we
were talking about.
If you even doubt me for a second, look at what's happened to
Cynk since it resumed trading -- shares have plummeted back to
earth, currently trading for about 60 cents a share.
Getting caught up in the market's irrational behavior is a
sure way to lose money in stocks. If you're looking to invest in
truly game-changing companies that can deliver triple-digit-plus
gains, don't get caught chasing fairytales like Cynk. There are
plenty of legitimate opportunities out there.
Here's a good place to start:
earlier this month
we brought you a glimpse of Andy Obermueller's "
11 Shocking Predictions for 2015
." The report is full of companies that are revolutionizing their
industries with game-changing ideas. These are all legitimate
companies with developments that have billions of dollars in
revenue potential. For example, in Andy's report, you'll learn
about one company working with Apple to potentially develop a new
electronic currency called "iCash." If they're successful, it
could make your wallet obsolete. You'll also get details about
another little-known energy company developing the
next-generation biofuel that could end oil's reign over the
These are the real opportunities for triple-digit gain
potential. Andy should know -- his previous prediction reports
have resulted in gains of 89%, 293% and even 310% just a year
after he released them.
In the end, you'll get far better results by investing in
companies that are working on what Andy calls "the Next Big
Thing" than you will in a lifetime of scouring OTC message
boards. To get more info on Andy's predictions,
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