Great question. I am also new to the stock market and I am going to stick with well known markets to start with. When you buy into small unknown companies you risk losing money!
There's always the risk to lose money Rosy, you can invest in big and well-known companies and win some money or you can take a chance on a small company and make even more, or lose sure.
I always stay with the safer options. It just hurts to much to lose lots of money. We all work hard for our money.
The risk is there whether a company is well known or unknown. Even the biggest performers needed to start as an unknown at some point, no? The stock market is always risky... as are most investments.
There's always risk even when the companies are known. Unless you have some really good experience or some inside information you'll always be putting your money on the line.
I suggest that we make a definitive list of the most promising penny stocks in today's market. I also think I speak for everyone who hasn't invested in penny stocks yet to ask the experts here for good online resources and readings about penny stocks.
I don't personally seek out "penny stocks", per se. If anything, I'm much more wary of them, and will buy them in much smaller amounts than I do other companies. When I do find the occasional gem that happens to be under $1 is usually when I'm looking for companies that fit my criteria for investing - things like well above average revenue growth, higher than average earnings growth, accelerating margins, high ROE, low PE / PB / PS / PEG, etc. Even then I only invest when I can find info on the company and feel optimistic about its future prospects. Sometimes I'm wrong.
And watching Wolf of Wall Street hasn't exactly made me want to rush into investing in penny stocks. I remember that scene where Leonardo DiCaprio was trying to sell penny shares from a company called Aerotyne International to this poor schmuck on the phone, and then they show this shot of a dirty garage with 'Aerotyne International' glued on the top of it LOL
I'm completely for this idea, it would be great to have a nice list made by the experts we know from the forum as opposed to some list we find on the internet randomly. Penny stocks are always a very random investment, the more safe we can male that bet the better.
Risk is mitigated by knowledge. The stock market can never be known, there will always be inherent risk. But the trick is to minimize the risk through knowledge. The less you know the greater the risk, so while every company is technically unknown at some point, the majority of companies worthy of investment are relatively known before they issue stock. In penny-land, not only is that not true, it's nearly impossible to trust the things you do research. The knowledge you gain studying pennies is inherently unreliable. I know. Well. So the risk here is dramatic because the knowledge that usually mitigates the risk can't be trusted.
