Desperation for money led me to buy penny stocks over 20 years ago, and fortunately it worked out quiet well, although a small success it is a penny stock success story.
When I went to University in my early twenties I was a mature UK student with a wife, one son and another son on the way: didn’t stop there, now have three sons.
For the first 6 months we lived in family housing (a small bedsit) on University (University of Sussex: just outside Brighton in East Sussex) and it was disgusting! Before we lived on University we didn’t know what a cockroach looked like, afterwards we did unfortunately!
We were living on UK student loans and student grants and so money was very, very tight and because I was a student we couldn’t claim any government benefits other than during the summer holidays: made us worse off than a single parent on Income support, I couldn’t put my family through the entire three years BSc degree in those terrible living conditions.
Why I Traded Penny Stocks
I found a few years old 3 bedroom house (apparently worth around £80,000 at the time which was a lot then) just off University campus (5 mins walk, so was perfect) in a very small/nice village called Falmer (can’t have been more than 50 houses around the entire University).
To rent the property I had to find a months rent and two months rent as a deposit which came to almost £1,500, which we did not have (not even close). I had around 10 weeks to find the money since the current tenants planned to move then (I went knocking on doors around the village looking for a place to rent and was lucky).
I had a student loan due for £800 and decided to invest it all in penny stocks on the London Stock Exchange. After a LOT of research (mostly via the Financial Times paper, (University library had back issues, didn’t have Internet access back then) I chose a mining stock (I forget the name of the company, something mining) for I think 4p a share as my first penny stock investment, I invested the entire £800 student loan in the one penny stocks (was confident it would go up, just wasn’t sure when).
It was a very risky investment strategy, but we really needed money fast for the rent/deposit and penny stocks had that potential. If it worked we’d have money for the rent/deposit, if it failed we’d have lost the £800 student loan that I’d have to pay back eventually (paid those off years ago) and would have no choice but to live on campus with our cockroach friends for the entire 3 years!
Penny Stock Screener
I had to learn how to find and screen promising penny stocks, fortunately I only needed one stock to double in price. I’d buy the Financial Times every morning to track the share price, created share charts by hand and about a week later the share price had over doubled (went up over two to three days if I recall correctly).
I sold the penny shares just before the peak (about 1p a share below the peak) and had over £1,700 from the one stock trade, more than enough to rent the house :)
You would not believe how good I felt, back then it was rare for anything good to happen to us and I’d never owned £1,700, so was a lot of money to us.
On an interesting side note: Next good thing to happen to us (less than a year later) was to win £1,000 and a packet of Maynard’s Wine Gums (which took months to arrive!) on a radio phone in to Long Wave Radio Atlantic 252 (used to listen to it all the time, shut down now). Had to be the 1,000th caller and I worked out we had to phone up ~3 mins 25 seconds after the phone lines opened, (made basic assumptions based on lines open etc…) 1st day we tried calling I got through and won.
You had to say a line to win “I listen to Long Wave Radio Atlantic 252” and I forgot the line and had to get my wife to say it :) We tried other times and got as close once again to them taking our phone number**: which should have been us winning, but since we’d already won once I think they didn’t call us back!
** This was a time when radio phone ins etc… were partially fixed, the winner was chosen within 5 minutes of the lines opening, we got a call back quickly, but they kept taking new callers for over 30 minutes! They then closed the competition and ran an edited version of the winning phone conversation: for example they cut out my first response which was “so I’ve won then?”.
Penny Stock Success Story Didn’t Last
We rented the house I’d found for ~18 months, at which point the owner decided to sell the property! Was a good 18 months though, we then had to rent a small flat in Lewes (small town a few miles from the University) which was more expensive and not half as good, was hard to find good places to rent and the 3 bedroom house was a few years old, so was very nice.
Anyway, when my next student loan came through I tried again and made small amounts in profit before I made 2 big investment mistakes: 1st was buying a penny stock that went bankrupt (was a BIG risk, was risking it not going bankrupt and making many times more than I invested) and lost £500.
And the second trading mistake was moving into UK traded options (a very high risk investment) and after getting to around £2,000 in profit I lost it all on one deal on the FTSE 100 traded options (calls) when a UK election was due. I thought the result would be different and stocks would go up, was wrong and they went down and lost all my profits: the calls were worthless so lost it all!
At which point I stopped trading in the London stock exchange altogether, I’d had to leave University early (near the end of of the third year, just had exams to sit) on medical grounds (couldn’t sit any more due to my back, so no exams) and there was nothing money wise on the horizon, I was disabled with student loan debts from University so couldn’t risk loosing money on trading shares etc…
So I came out of trading stocks about even ~2 years after my first penny share trade, but feeling good that I got my family out of a bad situation when we needed everything to go right for once.
Were Penny Stocks Worth It?
Yes, it was worth trading penny stocks, although I eventually lost all the profits (on traded options, not penny stocks) the short term success allowed us to move (that was the ONLY reason for buying penny stocks).
A couple of years later I started an online business (selling lingerie an sex toys) and things went from looking really bad to great, (business went well) I’ve toyed with the idea of trading shares, options, currencies (something financial) again since we’ve had spare money for a while now, but just haven’t committed to it until now: recently started trading UK shares again.
Were 20 odd years ago I was trading penny stocks with student loans of under £1,000, today I’m trading with some of our savings and starting with £20,000 as the money I’m willing to loose. Also have no short term need to make money fast, so not trading for desperation, more because it’s interesting to try something I tried over 20 years ago.