Archive for April, 2009
Prejudices of Penny Stocks
Written by troy on Tuesday, April 28, 2009 | No Comments
Categories: Uncategorized
Don’t ever judge a book by its cover. Chances are… it’s a good book. Otherwise it would have never been published. The same goes for penny stocks…
There are several accusations about penny stocks that can make an investor hesitant and timid to invest because of a “risky no-gainer gamble” stereotype. These statements are exaggerated and erroneous…
Learning the truth about what you heard in the past… might be a wealthy opportunity for the future…
Here is the top 3…
Misconception #1: Penny stocks are priced low because they are poor performing companies.
Penny stocks are usually small and newly created companies. While still trying to get established, penny stocks are analogically infants and toddlers compared to large-cap adult companies. With great parental guidance from a superb managing team, penny stocks can hold a promising future.
Hints: Do your research! Get background information. There may not be an abundance of information on the company because of lack of media attention. So research patiently and vigilantly.
Check if the managing executives and board members are respectable and passionate towards the company. A positive staff is always going to produce great work and show that through the company’s bottom line.
Make sure the company is in a growth position and if they are compatible with future trends and markets. A company’s willingness and desire to expand is a good indication of the value of a company to potentially rise.
Another good way to analyze a company is by reviewing a company’s financial reports and accounting sheets. 10-K annual reports are a great source to attain information. Comparing and analyzing numbers throughout the years will show the “guts” of a company that you won’t read or hear about in the news. However this process can be challenging…
In compliance with SEC rules, companies have to report their financial records. Inside executives know that these records are easily accessible and can show the value and worth of the company. As a loophole, firms will try format the reports differently every year to make the evaluation more difficult and tedious to analyze.
Misconception #2: Penny stocks are all frauds.
Some investors have fallen victim to the “pump and dump” scheme – a system where spammers will buy a stock and then hype it up by sending out positive e-mails and internet ads causing the price of the stock to jump. While the price is up, spammers will sell at a net gain, causing the price to fall, leaving their victimized investors holding the bag.
Hints: Go back to the basics. One of the primary rules to investing… never… ever… invest on tips and rumors. Chances are, your source is wrong or you’ll get in too late…
Do your research! Make sure you know what you are investing in. Make sure your sources are honest and ethical and act upon the interests of its investors and clients. Tips are only ideas. Investments should only be made on your own personal conclusions.
Misconception #3: Penny stocks will usually generate a net loss.
Every stock bares risk. Whether they are priced from $0.01 to $1000, or a micro-cap or a large-cap company. Barriers to entry and competition are high these days… Since a majority of penny stocks are young and small companies, its common for penny stocks to default under a competitive market.
In fact, penny stocks are one of the fastest and easiest ways to make double or even triple your money. It’s a whole lot easier for a $2 stock to jump to $4 than a $60 to $120.
Hints: Do your research! Are you starting to see a pattern here? Make sure the industry sector of the company is compatible for future market trends. Analyze the company by generating different scenarios. For example…Would the company be affected by high oil prices? Is their innovative product going to be the high in demand? How would they perform in a recession?
Generally, the more risk you have, the higher the yields can be. If you enjoy risk and want to make big-time returns, by all means go ahead and invest irrationally. But if you are risk-adverse, go back to the basics and diversify your portfolio.
There you have it, three truths to investing…
These common misconceptions are the response to investor’s bitterness of poorly managed securities. For what it’s worth, that’s up to you. But with sufficient research and a promising future market, penny stocks can yield gains far greater than you could have imagined…
Regards,
Mark Louie
By: Mark Louie
About the Author:
There are several accusations about penny stocks that can make an investor hesitant and timid to invest because of a “risky no-gainer gamble” stereotype. These statements are exaggerated and erroneous…
Learning the truth about what you heard in the past… might be a wealthy opportunity for the future…
Here is the top 3…
Misconception #1: Penny stocks are priced low because they are poor performing companies.
Penny stocks are usually small and newly created companies. While still trying to get established, penny stocks are analogically infants and toddlers compared to large-cap adult companies. With great parental guidance from a superb managing team, penny stocks can hold a promising future.
Hints: Do your research! Get background information. There may not be an abundance of information on the company because of lack of media attention. So research patiently and vigilantly.
Check if the managing executives and board members are respectable and passionate towards the company. A positive staff is always going to produce great work and show that through the company’s bottom line.
Make sure the company is in a growth position and if they are compatible with future trends and markets. A company’s willingness and desire to expand is a good indication of the value of a company to potentially rise.
Another good way to analyze a company is by reviewing a company’s financial reports and accounting sheets. 10-K annual reports are a great source to attain information. Comparing and analyzing numbers throughout the years will show the “guts” of a company that you won’t read or hear about in the news. However this process can be challenging…
In compliance with SEC rules, companies have to report their financial records. Inside executives know that these records are easily accessible and can show the value and worth of the company. As a loophole, firms will try format the reports differently every year to make the evaluation more difficult and tedious to analyze.
Misconception #2: Penny stocks are all frauds.
Some investors have fallen victim to the “pump and dump” scheme – a system where spammers will buy a stock and then hype it up by sending out positive e-mails and internet ads causing the price of the stock to jump. While the price is up, spammers will sell at a net gain, causing the price to fall, leaving their victimized investors holding the bag.
Hints: Go back to the basics. One of the primary rules to investing… never… ever… invest on tips and rumors. Chances are, your source is wrong or you’ll get in too late…
Do your research! Make sure you know what you are investing in. Make sure your sources are honest and ethical and act upon the interests of its investors and clients. Tips are only ideas. Investments should only be made on your own personal conclusions.
Misconception #3: Penny stocks will usually generate a net loss.
Every stock bares risk. Whether they are priced from $0.01 to $1000, or a micro-cap or a large-cap company. Barriers to entry and competition are high these days… Since a majority of penny stocks are young and small companies, its common for penny stocks to default under a competitive market.
In fact, penny stocks are one of the fastest and easiest ways to make double or even triple your money. It’s a whole lot easier for a $2 stock to jump to $4 than a $60 to $120.
Hints: Do your research! Are you starting to see a pattern here? Make sure the industry sector of the company is compatible for future market trends. Analyze the company by generating different scenarios. For example…Would the company be affected by high oil prices? Is their innovative product going to be the high in demand? How would they perform in a recession?
Generally, the more risk you have, the higher the yields can be. If you enjoy risk and want to make big-time returns, by all means go ahead and invest irrationally. But if you are risk-adverse, go back to the basics and diversify your portfolio.
There you have it, three truths to investing…
These common misconceptions are the response to investor’s bitterness of poorly managed securities. For what it’s worth, that’s up to you. But with sufficient research and a promising future market, penny stocks can yield gains far greater than you could have imagined…
Regards,
Mark Louie
By: Mark Louie
About the Author:
Mark Louie is a contributor to the daily e-letter The Penny Sleuth. The Penny Sleuth offers unbiased commentary from expert analysts and authors on Small Cap Stocks, Pink Sheet Companies, OTCBB and Penny Stocks.
Learning to Day Trade Penny Stocks is a Valuable Skill
Written by troy on Tuesday, April 28, 2009 | No Comments
Categories: Uncategorized Tags: Day Trading, Trade Penny Stocks
Learning to day trade penny stocks is a skill that will pay off for years and years to come. As there will always be companies, there will always be companies that are at their lowest point that you, as an investor can profit from.
Some people think they can’t day trade penny stocks but they are simply either uninformed or intimidated. Anyone can day trade penny stocks and earn a substantial income if you make the right choices and have good tools to help you make those investment choices.
I’ve been day trading penny stocks for quite some time now. I haven’t become a millionaire yet, as the money that I earn is based upon how much I have to invest. However, the numbers are growing and the snowball effect of reinvesting my returns is paying off enough that I can spend more time at the golf course or goofing off on the internet like I am now.
Is there a risk involved in day trading penny stocks? Absolutely. There is a risk in any investment. Even 401k plans can go under. The advantage of day trading penny stocks is that you can see your returns quickly and you’re actively involved in the investment process. With other forms of investment that are more common, people are less engaged with their investments and not actively attending to them.
The main factor that holds people back from getting their feet wet with penny stocks is simply hesitation. Fear of failure is something that holds people back in many areas of life and this is no exception.
In my opinion, you should spend 50% of your time researching the markets and the tools that you can use to take advantage of undervalued investments.
Choose the companies that you invest in wisely and use tools that can help you make good judgements based upon long term trends and short term trends.
It can be very tempting to just jump out and buy 100 shares at 50 cents each, however all of those small investments add up to create a bigger picture. If you can be successful making good judgements about smaller investments, you can certainly make big time profits with larger investments day trading penny stocks.
Make informed decisions and don’t let the excitement get to you. Every successful investor eventually learns to buy and sell off of ‘instinct’, however it’s advisable that when you start out in your day trading ventures to use good analytical tools and resources.
So how do you make a good income with this method of trading?
Document the trends, watch and learn. Start out with smaller investments and grow as you learn and feel more comfortable. That way you are likely to have a company to invest in for a low risk profit. Overcomplicating the process vs doing adequate research is a fine line for most traders.
Confidence in day trading comes from experience. There simply is no substitute for experience and the best way to gain it is by experimenting with smaller numbers.
Day trading penny stocks can be a great way to get in on profitable markets if you simply make good choices and do your research as I mentioned above.
Best of luck in your ventures and thank you so much for reading my article.
Cheers.
By: Clay Michael Walker
About the Author:
Some people think they can’t day trade penny stocks but they are simply either uninformed or intimidated. Anyone can day trade penny stocks and earn a substantial income if you make the right choices and have good tools to help you make those investment choices.
I’ve been day trading penny stocks for quite some time now. I haven’t become a millionaire yet, as the money that I earn is based upon how much I have to invest. However, the numbers are growing and the snowball effect of reinvesting my returns is paying off enough that I can spend more time at the golf course or goofing off on the internet like I am now.
Is there a risk involved in day trading penny stocks? Absolutely. There is a risk in any investment. Even 401k plans can go under. The advantage of day trading penny stocks is that you can see your returns quickly and you’re actively involved in the investment process. With other forms of investment that are more common, people are less engaged with their investments and not actively attending to them.
The main factor that holds people back from getting their feet wet with penny stocks is simply hesitation. Fear of failure is something that holds people back in many areas of life and this is no exception.
In my opinion, you should spend 50% of your time researching the markets and the tools that you can use to take advantage of undervalued investments.
Choose the companies that you invest in wisely and use tools that can help you make good judgements based upon long term trends and short term trends.
It can be very tempting to just jump out and buy 100 shares at 50 cents each, however all of those small investments add up to create a bigger picture. If you can be successful making good judgements about smaller investments, you can certainly make big time profits with larger investments day trading penny stocks.
Make informed decisions and don’t let the excitement get to you. Every successful investor eventually learns to buy and sell off of ‘instinct’, however it’s advisable that when you start out in your day trading ventures to use good analytical tools and resources.
So how do you make a good income with this method of trading?
Document the trends, watch and learn. Start out with smaller investments and grow as you learn and feel more comfortable. That way you are likely to have a company to invest in for a low risk profit. Overcomplicating the process vs doing adequate research is a fine line for most traders.
Confidence in day trading comes from experience. There simply is no substitute for experience and the best way to gain it is by experimenting with smaller numbers.
Day trading penny stocks can be a great way to get in on profitable markets if you simply make good choices and do your research as I mentioned above.
Best of luck in your ventures and thank you so much for reading my article.
Cheers.
By: Clay Michael Walker
About the Author:
A list of penny stocks and tools useful tools are provided by Michael at http://pennystocksforprofit.com. Michael resides in Atlanta, Georgia.