Good point. Also, I didn’t mean to pick on SIRI – I was just thinking about where the stock was trading and it hit me as an inspiration to post on why it’s generally NOT a good idea to buy a stock JUST because it was cheap. I could have chosen dozens of examples, but it was the first to come to mind.

Corey, we are in agreement on this.

Love the Vegas quote, Corey. My sentiments exactly. Although, without those willing to take risky bets against my not so risky bets, I definitely wouldn’t be as interested in finance.

It was said on my blog – not at first by me, but by a reader in the comment section – that after the stratospheric rise in bond prices into 2009, that there would likely be some sort of nasty action. I think the quote was something like “It ain’t gonna be pretty” or something like that.

This is the normal activity after such a large ‘flight to safety’ or other factors that caused such a steep rise. The excess is being shaken out. I’ll try to tackle that count over the weekend.

The first ‘trade’ I took back in high school was in a penny stock that moved from $0.05 to $0.60 in a month. I bought in about $0.50. It went to $0.25 – I sold out, it then went to $1.20 then fell a few weeks later to $0.

Other recent examples off the top of my head include SOEN (a solar energy ‘wonderstock’ that’s moved from $2.00 to $0.20), CROX which moved from $75 to $1 in a year, and any number of financial stocks trading less than $2.00 provided they still exist. Lehman and Bear Stearns – as solid as people thought they were – no longer exist. The well-celebrated Bill Miller fell victim to this trap and it cost his investors millions. Also Jones Soda (JSDA) which even I was bullish on and Cramer had recommended as a “must buy” stock. I drink Jones soda beverages frequently. It peaked at $32 and now trades at $0.30.

My argument is – no matter how wonderful you think the company is – stay the heck away from stocks under $5 unless you really, really know what you’re doing.