Christina and “John Bell”

Christina:

It pains me to hear about people, like yourself, who lost a lot of money chasing these “John Bell” penny-stock SCAMS. I take it as a given fact that whenever any promoter gets involved with a penny-stock company it is a pump-and-dump scam. Since I first called Jammin Java a penny-stock SCAM on 23rd December 2010, I have been following this “John Bell” character, who I am convinced is actually Shane Whittle, and his techniques. I do my best to warn people to stay away from these situations. However, the lure of a 2-fold, 5-fold, or 10-fold profit is powerful even for old hands such as myself and my friend Dan. If I were in your shoes, I would simply take the loss on all the penny stocks that you purchased and learn from the lesson that there is no such thing as a free lunch.

One does not need to follow the advice of SCAM artists such as “John Bell”. It is possible to obtain handsome returns in the market if one is patient, willing to spend the time to learn how to spot genuine bargains, and be prudent in investing. For instance, on 31st July 2012, I created a small portfolio with equal amounts dedicated to the following companies: PFIN, CRAI, GAI, MPAC, and REGI; each was purchased at, or close to, the closing price on that date. On 1st October 2012, I purchased an equal amount of DCIX and added it to the portfolio. The following table tells the rest of the story.

Table 1: The design of a real-money portfolio producing a modest rate of return.
Symbol   Quantity Price Total Cost Price Today Market Value Gain
PFIN   189 5.27 1,006.02 6.0516 1,143.75 13.69%
CRAI   65 15.49 1,016.84 18.27 1,187.55 16.79%
GAI   222 4.50 1,008.99 6.64 1,474.08 46.09%
MPAC   228 4.38 1,008.63 6.80 1,550.40 53.71%
REGI   202 4.95 1,009.89 6.15 1,242.30 23.01%
DCIX   176 5.61 997.35 5.67 997.92 0.06%
Total       $6,047.72   $7,596.00 25.60%

This is not some list that I made after the fact by careful selection of winning companies. This is a real-money portfolio built using a particular type of investment strategy and the shares were purchased on the day that the method identified the shares. You may check the numbers for yourself: the total yield of the portfolio as at the close of the markets on 7th December 2012 was 25.6%. Let us see if “John Bell” can come anywhere near that over the course of time.

The transaction costs were $9.99 per company purchased.

Of course, one will experience gut-wrenching volatility with these types of portfolios. This portfolio was created inside of a ROTH IRA for the following reasons: (1) there is no required minimum distribution so there is no chance of being required to liquidate part of the portfolio at an inconvenient time; (2) the investment strategy will have an opportunity to smooth out the volatility over time; (3) all capital gains and dividends accrue free of taxes; (4) after five years, distributions can be made from the IRA free of both state and federal taxes.

I have now designed an investment strategy that provides an average annualized yield in excess of 33.5%. This strategy has been backtested over 14 years of stock market data. This particular strategy will be launched within the week in my ROTH IRA.

I hope that this helps.

Nathan A. Busch

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