Well yeah, but that doesn't just happen with penny stocks. Sure, the risk is lower if you buy blue chip stocks, but you CAN still lose money on them. Higher risk higher reward.
Which is why I advise everyone on this forum to be careful with your investments. They can backfire and you can potentially lose everything if you do not play it smart and actually pay attention to what you are doing.
There's nowhere near a 1:1 correlation between risk and reward when it comes to investing. If that was true, those who go out and buy the riskiest investments and use the riskiest strategies would end up with the greatest returns and most money. The richest and best investors usually go to great lengths to manage risk - and part of that strategy includes sticking to companies that are actually worth something. Most (not all) companies trading under $1 are crap and virtually worthless. You'll almost certainly fare far better if you stick to buying companies trading above $10 than looking for the next Microsoft among all of those under $1. I did buy a couple hundred bucks worth of this today, but it's just a very small holding for me: http://www.marketwatch.com/investing/stock/VLTC
I disagree with you about penny stocks I did not read all of the posts on this topic. Who has that kind of time? Respectfully, I have to disagree with you on the few statements I did read. Penny stock are volatile and that's what you need especially if you have a small account. You assume blue chips are safer but buying a stock like Apple or even Microsoft will not double your money even in a year most likely and how many shares are you going to be able to buy with only a small account? Making back your brokerage fees alone will dictate bigger moves than those type of stocks generally make. Of course I'm talking about trading stocks not investing long term. The old buy and hold strategy will never make you rich. How on earth can a small investor ever grow his account enough to get past the PDT Rule, making a lousy 5 to 15 percent a year. Penny stocks often move 20 to 50 percent in a day and can even move thousands of percentages in less than a month, on the right promotion or news. Proper research coupled with disciplined trading (i.e. following the rules and sticking to your plan) can make trading penny stocks very profitable enabling small traders to build their accounts exponentially. The key is cut loses quickly and build enough wins to make more than you lose, slowly building your account. I have a free website with no email required and nothing to buy or subscribe to. I don't collect email addresses on my site nor do I promote stocks or send out stock tips. I'm not a promoter but I'd like to share my website with new traders to help them get started trading small cap stocks and perhaps avoid some of the mistakes I made while I was learning. Tim Grattini, a small cap trader I know, took $1500 and lost it all but he learned from it. He then spent a summer earning another $1500 which he was able to turn into 2 million in just 3 years. You'll never experience that kind of return on investment trading blue chip stocks sir. Again, no offense intended. My website is munozinvestments dot weebly dot com which I will post as often as I am allowed to after I post a few times.
I strongly disagree with you Marc. I realize you have a website and a methodology to sell, but you're putting out info that is very dangerous. You should read this and the other threads in this section. Buy and hold does build wealth over time. That doesn't mean to just stick to "blue chips" and hold them forever necessarily. It just means buy stocks in companies that are actually worth something. And don't gamble. I'm pretty wealthy by most people's standards after 21 years of investing. Many others are far wealthier than I. Flipping in and out of positions constantly is suicide for the small investor - STCG taxes, transaction costs, etc.
BTW, that stock I bought Friday for $2.31 is now hitting $4 a share. I bought it for several very specific reasons - NOT because it had a low sticker price. Time to take profits!
you dont make any sense That's to funny. Perhaps that's why you choose to use a fake name. You proved my point with your purchase of the small cap stock at $2.31 and the fact that already you are going to sell it and take profits in less than a week. No insult intended but geez don't you see what you just did? Selling it so quickly and taking profits is exactly what I was talking about verses the buy and hold BS that this original post was touting as the only safe way to trade. What you did with that small cap (penny) stock is the way to build wealth. If the stock price had been $50 and it went up $1.69 it wouldn't even be enough for a small investor to cover his brokerage fees (small investors could not buy very many share of a $50 stock) but because it was a $2.31 a share stock that's a nice % gain and could effectively grow a small account in a big way. Why are you against trading penny stocks with your words and then turning around and doing the opposite with your actions? I'm very sorry but you don't make any sense to me.
If you'd bother to read and not just spam with your system you're selling, you'd perhaps understand, and it would maybe make sense to you. I keep a SMALL amount of my $ set aside for more speculative activities, such as a couple hundred shares of the stock I bought last week. I keep no more than 5-10% set aside for riskier, more aggressive investing - such as low priced stocks, the occasional quick trade, options, etc. Most of my positions are held for weeks, months, or longer. A few here and there for days or even less than a day on occasion with limited amounts of money - risk management. Just one example of buy and hold "bluechip" ... I bought Apple in early '07 in the upper 80's. Bought more here and there, sold some here and there, still own some. Have made hundreds of thousands over 8 years with them. I use a "fake name" for privacy. It's none of your business who I am, but I'll just say that I've been in the securities business for over a decade. Started with a large bank, moved on to a large firm, then on to my own private investment fund over 5 years ago. I have held numerous securities and insurance licenses over the last 11 years. I manage over $100 mil of money for a small number of accredited investors now. I have to practice risk management with them to help protect their money, earn them income, and achieve other goals in some cases such as growth / capital appreciation. I could not put all $100 million of their assets in "penny stocks" even if I wanted to - regulations, for one thing. Brains and experience on my part for another - particularly for my own $8 million in personal assets. I would have bought more Monday if it had sold off. But because it shot up again, I sold most of it. I then bought a couple grand of it yesterday when it sold off nearly 15%. Again, I bought mainly for fundamentals / valuation reasons, and not because it was $2.31 a share or $3.80 a share yesterday. Also, Icahn Enterprises has a 50+ % stake in it. None of the world's richest men got there by mostly or entirely gambling on penny stocks. They buy things with value when they are cheap or rapidly growing or both. How long have you been in the game? How have you done? How much have you made? How much have you lost? How did you do in '08? I've been investing 21 years. Have averaged nearly 15% in my taxable accounts, nearly 12% in retirement accounts. Started with $100k in my taxable accounts, have added to them as much as possible over the years, now have roughly $6 mil in taxable accounts. Started with nothing in my first 401k, have close to $2 mil in various old IRAs, SEP, etc. Managed to hold onto 75% of my money during the crisis of late '07 thru early '09. I'm a self-made multi-millionaire. You? If you think you're the smartest guy here, it's already obvious to me that you're not. Lay off the personal insults, read, and learn. If you're just here to spam, there are other places you should go.
Just in case you missed it, that stock I bought lightly last week (Thurs, not Fri - my mistake) is a very small part of my portfolio. And I am a very advanced investor with millions in assets. Those who are starting out with a few hundred or a few thousand should avoid such speculation until they're more experienced and have more money, and only use small amounts of money for such speculation (risk management). Transaction costs, realized losses, short term cap gains taxes, etc will eat up a few hundred or a few thousand pretty quick - particularly when one is gambling on largely worthless "penny stocks" or day trading (or both).
If I was a beginner like that guy you mentioned, and I only had $1500 in life savings that I trusted you to invest for me, and you blew it all right away on one of your lame penny stock gambles, I'd have a man to man chat and get it back from you - or I'd have you in more trouble with regulators and litigators than you'd know what to do with.
