![]() ![]() It was the low float that made it ripe for a short squeeze. In other words, NAEI is a dormant company. The company has never issued a press release, and by its own financials, has pretty much nothing in the way of assets or operations. Until Wednesday, NAEI was a ticker that traded by appointment, i.e. And by "anybody", we are referring to those potentially looking to cover short positions. Presumably then, anybody looking to buy stock was at the mercy of the shareholders. ![]() Yes, that is a nine month old number, but since the stock rarely traded before Wednesday, it is logical to assume that this number was not much different at the launch of Wednesday's pump. ![]() So why did the NAEI pump begat the short-lived, better than 10,000% gain in the share price? Because too many traders ignored that fact that the stock has a low float and shorted shares without considering whether there was a viable way out.Īlthough the company reports having 326,965,299 shares issued and outstanding, according to OTCmarkets, as of Apthere were only 1,009,177 shares in the float. The fact is that NAEI is an empty shell and Pro Trader Elite/Pereira are just plain liars. "NAEI's mission is to be a leader in the deployment of solutions and the implementation of projects." Really? Gee, you would have thought that NAEI would have done something.anything, if they had any sort of mission. Pereira freely throws around meaningless jargon in hopes of conning the unsophisticated. "NAEI has technicals that show promise as well, with a float of just over 1M." What "technicals"? The company barely traded before Wednesday. What seriousness? There has never been a press release announcing anything and the company has no operation whatsoever. "A company that shows this level of seriousness.". This is an entirely fabricated statement. This pump piece makes several statements that cannot be supported, for example, ".about to engage in funding to meet the growing demand of renewable energies in Asian markets. On February 1st, Pro Trader Elite disseminated several hype emails, like the one on the right, over the course of just a few minutes. ![]() We will start out by stating the fact that Rafael Pereira (if that is his real name), the publisher of Pro Trader Elite, set out to deliberately defraud the public with his promotion of NAEI. We just saw this scenario played out to perfection last week with Pro Trader Elite's pump of New Asia Energy, Inc. It's a dangerous game that has played out to great detriment several times over the past years. And if the shorted stock has a low float, the result can be disastrous, as the unavailability of stock to cover the short amid margin calls can create a huge jump in the share price. Well the same logic can be applied to stocks going south. There will be hills and valleys in any chart, even if the general trend for the stock is upwards. There's an old adage that no stock, no matter how legitimate, goes up in a straight line. It's all in what happens on ticker's path to zero. If the stock is going to zero, how can the risk be unlimited? "Well wait a second", one might protest, citing our acknowledgement that almost all, if not all, penny stocks are scams. However, when a stock is shorted, the risk is unlimited. The positive news here is that there is a limit to the potential loss. And of course that probability of such a risk is enhanced if the investment is a penny stock. When a trader goes long on a stock, he risks losing his entire investment. So why doesn't this create a set up for the perfect storm for those who chose to short these stocks? It's all in the risk. And yes, the share price of almost all hyped stocks will head towards zero as fast or even faster than they climbed. Yes, 99% of penny stocks are scams, or at least losing propositions. While the sentiments against intrinsic value in penny stocks may be correct, the concept of shorting penny stocks to make easy money is severely flawed. The truth, however, is that shorting penny stocks is utterly and completely stupid and potentially puts the trader at far more risk than the guy left holding the bag of worthless shares. Those traders who lie in wait for these situations look upon them as can't miss opportunities to profit from the losses that will be inevitably incurred by the majority of those investors who are attracted to pie in the sky dreams of easy money. The prevailing mindset is that all penny stocks are scams and all hyped stocks will eventually fall out of bed. Rafael Pereira runs a pyramid scheme on New Asia Energy and teaches an expensive lesson to the shortsįebruary 5, 2017: The idea of shorting penny stocks, especially those tickers undergoing a promotion, is an attractive strategy to many traders. ![]()
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