In this article we will discuss in detail the behavior of one of the star stocks of this 2014 in the OTC market: Dewmar International BMC Inc. – DEWM.
DEWM represents the action that every investor dreams of throughout his career. Its evolution perfectly fulfills all the points we discussed in the article Reglas elementales para operar en el OTC. Remember that DEWM is a company that produces relaxing drinks, the new fashion in North America that begins to gain ground to energy drinks. We are going to dissect the evolution that suffered the price of the action step by step:
DEWM quote for the years 2012 and 2013
This is the aspect shown in the DEWM chart from mid-2012 to December 2013:
As you can see, from $0.19 in July 2012, it fell to $0.0001 in December 2013. This is because the company entered into a spiral of toxic financing through the most important creditor of OTC (Asher) that brought with it an inordinate dilution to pay the debts that pulverized the price of the shares.
However, it is at that precise moment when we would have recommended opening a first purchase position in the value, at a price of 0.0001 – 0.0002 $, level in which it remained around three weeks. Many readers would surely have been surprised and considered it crazy to open a position in an action that has been going down for two years without shame, in addition, it had been a long time since there was remarkable news of the company, which also does not help attract the interest of investors . Nothing is further from reality: the moment in which large falls in the price and silence are combined by the company is when we pay more attention to it.
The sleeping giant awakens
In mid-November the company published a press release that did not seem relevant, but in it they warned of the possibility of obtaining contracts with a large US chain of sales, an option that investors did not take very seriously. I saw 99% of your money disappear in just two years and thought that the company was already on the verge of bankruptcy.
However, anyone who was attentive to the quote and read that press release, had before it a unique opportunity. Three or four weeks after this event, DEWM announced that nothing more and nothing less than Walmart, the large supermarket chain in the country, was going to start selling its Slow Motion Potion drink in a small number of stores on a trial basis.
On the day of the publication of that news, the actions of DEWM went from being worth $0.0001 to having a price of $0.0012, that is a 12x bagger:
This incredible rise in a single day is due to the outstanding character of the published news. That a company manages to place some of its products for sale in a chain the size of Walmart entails a considerable increase in future revenues. It seems a good enough news to have bought that same day even at $ 0.0012 if it had not arrived on time, right?
Error. We should never let ourselves be guided by euphoria, no news is good enough to multiply in one day the price of action x12 and the next day continue the meteoric rise. Investors take profits and everyone who bought expensive ends up becoming a bagholder (holding the stock market: in losses, unable to sell). In very specific cases like this happens the miracle and the action continues weeks later the rise, but statistics tells us that this is the least usual, so we must play with the odds on our side.
As you can see in the graph, the price ended up rising to the incredible figure of three cents in less than two months, but it did so through waves of rise and correction (waves of Elliott) listed in the chart, there being a total of six. The published news was good enough for the price to go up much more, as it eventually did, but we should have expected corrections for our purchase, like wave number 2, which corrected the sudden rise of Walmart news day . That would have been a good entry point, at a price between $0.0004 – $0.0005 if we lost the opportunity to do it at $0.0001 – $0.0002.
In the following weeks, another series of news bombs were uncovered that triggered the final explosion of the quotation, among them:
- End of dilution and payment of all Asher’s convertible notes.
- Company entering in the marihuana business. (Burbuja de la marihuana al estilo de la puntocom).
- Expansion to more Walmart stores after registering good sales of the drink in the pilot establishments.
If we go over the graph, the stock rose from $0,000 to a maximum of $0.0334, which represents an astronomical revaluation of a 33.300% or, what is the same, The share price multiplied 334 times! Incredible, right?
DEWM is one of the few cases in which, due to numerous factors, we would have recommended holding a part of the shares of those who managed to buy in $ 0.0001 up to 0.0050 – 0.01 $. Anyone who had bought $300 at $0.0001 and sold at $ 0.01 would have converted their initial investment to $30,000 in just two months. This is the real magic that makes the OTC market the most profitable and volatile in the world.
It is also important to highlight the fact that, in the end, DEWM began to fall from the ceiling that marked the three cents and most likely end up back in the three zeros. Before starting the fall, in the forums, thousands of comments from hundreds of different users predicted that it would become the new Red Bull or Monster of relaxing drinks, but all those pumpers already made cash by selling their shares at the same time they published those So encouraging messages, turning the dreamers who preferred to keep their actions in bagholders, perhaps, for life…