Comments on: Penny stocks – are they worth the research & possible investment? http://www.stockpickins.com/penny-stocks/penny-stocks-are-they-worth-the-research-possible-investment/ Cherry Picking The Diamonds From The Stock Market Sat, 03 Apr 2010 23:38:59 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: TheAnswerMan http://www.stockpickins.com/penny-stocks/penny-stocks-are-they-worth-the-research-possible-investment/comment-page-1/#comment-2795 TheAnswerMan Tue, 07 Jul 2009 13:20:59 +0000 http://www.stockpickins.com/penny-stocks/penny-stocks-are-they-worth-the-research-possible-investment#comment-2795 Penny stocks can have excellent returns (in the tripple digits) in a very short time period. However, these stocks can also fall much faster and further. I have gotten great returns on penny stocks but only when I avoid putting all my eggs in one basket. What I do is invest in equal proportions in several penny stocks that I like. This way if I loose close to 100% in one stock this is more than offset by the several hundred percent gain on other stocks. Penny stocks are less liquid which means that even if you have a great paper gain you might have a tough time realizing said gain. This is your order sometime could take a while to execute and ultimatly execute at worse conditions than you would get on a more liquid share. As a general rule stocks don't IPO as penny stocks, in other words the stock has fallen since its offering. If you look at penny stocks as a value investor and analyze them as you would analyze value stocks you will usually find severely over sold stocks. These are the gold mines, however sometimes there is a reason why a stock has become a penny stock and you could get burned on those. (Hence the importance of research and diversification) The biggest risk I have seen investing in penny stocks is that their valuation is often highly dependant on news flow. Sometimes there is are union negotiations, FDA approval, new product launches which can make or break a company. Unless you have material non-public information (insider trading) it can be quite difficult to know if this particular stock is going to shoot up 3 digits tomorrow or if the company is about to disappear.<br><b>References : </b><br> Penny stocks can have excellent returns (in the tripple digits) in a very short time period. However, these stocks can also fall much faster and further.

I have gotten great returns on penny stocks but only when I avoid putting all my eggs in one basket. What I do is invest in equal proportions in several penny stocks that I like. This way if I loose close to 100% in one stock this is more than offset by the several hundred percent gain on other stocks.

Penny stocks are less liquid which means that even if you have a great paper gain you might have a tough time realizing said gain. This is your order sometime could take a while to execute and ultimatly execute at worse conditions than you would get on a more liquid share.

As a general rule stocks don’t IPO as penny stocks, in other words the stock has fallen since its offering. If you look at penny stocks as a value investor and analyze them as you would analyze value stocks you will usually find severely over sold stocks. These are the gold mines, however sometimes there is a reason why a stock has become a penny stock and you could get burned on those. (Hence the importance of research and diversification)

The biggest risk I have seen investing in penny stocks is that their valuation is often highly dependant on news flow. Sometimes there is are union negotiations, FDA approval, new product launches which can make or break a company. Unless you have material non-public information (insider trading) it can be quite difficult to know if this particular stock is going to shoot up 3 digits tomorrow or if the company is about to disappear.
References :

]]> By: Rickster http://www.stockpickins.com/penny-stocks/penny-stocks-are-they-worth-the-research-possible-investment/comment-page-1/#comment-2794 Rickster Tue, 07 Jul 2009 12:59:59 +0000 http://www.stockpickins.com/penny-stocks/penny-stocks-are-they-worth-the-research-possible-investment#comment-2794 I pretty much only trade penny stocks. The reward is always so much greater. I've had some bad luck but not any more than with "big" company stocks and i've made a ton more with penny stocks. Just do your home work and there are a ton of penny stock forums and other venue's that you can go and read what other people think are gonna go up. I love them, of course i'll trade a major company every once and a while but my heart is in penny stocks<br><b>References : </b><br> I pretty much only trade penny stocks. The reward is always so much greater. I’ve had some bad luck but not any more than with "big" company stocks and i’ve made a ton more with penny stocks. Just do your home work and there are a ton of penny stock forums and other venue’s that you can go and read what other people think are gonna go up. I love them, of course i’ll trade a major company every once and a while but my heart is in penny stocks
References :

]]>