The markets continue to rip higher with no clear end in sight. That's a good thing. It's also proving to create a tailwind for the entire small and micro cap space. However, not all small and micro cap stocks are created equal, ever. While the markets are clearly in breakout mode, there's a plethora of penny stock names out there that continue to get left behind - many for good reason and many for no good reason whatsoever. Even in a spiraling downward market, you'll have penny stocks that rocket and penny stocks that fall apart into oblivion. Point being, penny stocks often do trade completely independent of the rest of the markets, so don't be surprised when the markets are down, you're penny stock is up, and vice versa. Why? Because how and why they trade the way they do is so vastly different than their big brothers and sisters, not to mention how different the fundamentals are between large cap stocks and micro caps. In other words, most penny stocks - and when I say most I mean over 90% of them - do not generate positive earnings, and many of them don't even generate much revenue yet either. Yet, they can produce some of the biggest returns you've ever seen - the type of returns even a small guy with a few thousand bucks can make a lot of money with. Virtually all penny stocks trade far more on their future potential than they do on their previous valuation metrics, or even any valuation metrics for that matter. As a matter of fact, most penny stocks are far more sensitive to news than they are to their quarterly filings. i.e., 10Q etc. What I'm saying here is it's all about business model, and more importantly just how much potential and revolutionary that business model is going to be in the grand scheme of things. Additionally, don't ever expect any penny stock to go up and up and up without first driving you extremely crazy somewhere along the way. Once most penny stocks finally amass enough volume to create a fair and liquid market, even then the volatility is nuts! However, once again I'll say when you're in the right penny stocks the returns can be astronomically out of this world. So, you've heard us say so many times the best time to buy penny stocks is either when they're out of favor, they've gone to sleep, or completely ignored all together. Although this definitely isn't the case for large caps, it's definitely our opinion when it comes to penny stocks. There's one more golden rule; knowing when to say enough is enough. Meaning, knowing when to cut your loss in an idea that's not working out. Is that 10%, 20%, 30% or more? It all comes down to the individual, but one thing's for sure, you should always determine well in advance what that number is going to be. Truth is, if you're going to do extremely well with penny stocks, you've got to consider all of the above, and you've got to stick with those very basic rules - not just some of the time, but all of the time. When you consider everything I just said, there's several penny stocks that come to mind, but two that fit all of the above, in my opinion anyway, are SPYR, Inc. (SPYR) and Patriot One Technologies, Inc. (PTOTF). There's plenty more, but both of those two immediately come to mind. Contrarian Penny Stock Study 1 - SPYR, Inc. (SPYR) Just this morning, SPYR, Inc. (OTCBB: SPYR) announced its flagship game, Pocket Starships, is now available for download and play on VK.com (VK), a social networking site very similar to Facebook and the fifth most visited website in the world. VK is the largest online social media and social networking service in Europe, and as of January 2017, VK had at least 410 million accounts. If you want to read the press release in its entirety, just go here: https://finance.yahoo.com/news/spyrs-pocket-starships-now-available-123000991.html. That's not my point with SPYR today though. Was the news great? Yes, it's equally as good as their recent announcement the company's Pocket Starships game has also been added to Facebook's new Game Room, which actually not that many games were selected to be a part of Facebook's beta launch for its new Game Room. But, not even that is the biggest reason I like SPYR going forward. Here's the BIG reason - SPYR is working to position itself in what is projected to be a massively huge growth opportunity over the next few years and beyond know as eSports. Just look at how Activision Blizzard (ATVI) and Electronic Arts (EA) have been trading in recent months. That should tell you something. In short, eSports consists of player vs. player video games that's recently garnered the attention of the NFL, the NBA and MLB if that tells you anything. Companies and even countries have started to assemble teams. Folks, this is a very real opportunity. And the way we understand it, SPYR's underlying goal within the eSports space is to focus on developing and publishing games that are prone to a highly competitive playing environment. As you can see, SPYR not only sits within a space that is projected to grow by leaps and bounds, the company itself is very real at legitimizing how and where they plan to fit within the eSports space. Yet, the stock is down around long-term lows. See what I mean regarding what I said above with respect to how penny stocks trade etc.? All I can say is buy low sell high. The rest is up to you. Contrarian Penny Stock Study 2 - Patriot One Technologies, Inc. (PTOTF) Then there's Patriot One Technologies, Inc. (OTCBB: PTOTF), another company we believe has all of the makings of a potential homerun someday, but for a much less entertaining reason than SPYR. Patriot One Technologies has developed a first-of-its-kind Cognitive Microwave Radar concealed weapons detection system as an effective tool to combat active shooter threats before they occur. In other words, detecting an armed threat without any sort of cooperation from the threat itself. A little over a week ago, the company announced its university research partner was awarded CAD$161,321 from the Natural Sciences and Engineering Research Council's (NSERC) Idea to Innovation Phase II Grant, which will help to advance and further evolve its Intellectual Property (IP) portfolio. NSERC's grant, along with cash and in-kind contributions from Patriot One, creating a total project value of almost CAD$355,000, will assist in propelling the company towards new products and solutions for the detection of concealed weapons. Proposed advances include practical trials aimed at commercial development of low power wearable and vehicle mounted adaptations of its innovative software and related hardware solution. News of the funding comes at a time of growing public interest as the company recently received significant industry recognition of its efforts as category winners (Anti-Terrorism & Force Protection) at the 2017 Security Industry Association's (SIA) New Product Showcase (NPS) component of the ISC West conference and trade show, the largest annual industry event of its kind in North America. With terrorist threat tensions around the globe being as high as they are, if Patriot One can inevitably find itself embedding their advanced technology in major populated commercial and government locations around the world, how much will the company be worth then? Yet, shares of PTOTF are also down around long-term lows right now. You see, most penny stocks at some point in their long life end up getting extremely disconnected from what was once viewed as tremendous potential and buying hysteria. We've seen it ever since we launched the SmallCap Network about 17 years ago. We've seen stocks crater into oblivion, only to come roaring back, and we've seen stocks run like the wind only to fall like a meteor. What's the lesson today? Buy those penny stocks you find to be business model attractive, but buy them when they're down. Then, set a level you're willing to accept as a loss of the stock doesn't work out. Or, just allocate what you're willing to risk 100% of and let the company do its thing from there.