We have all heard the stories. Stories of success and high percentage returns on penny stocks. Although the legitimacy of many of these claims are rather questioning, what are your personal experience with penny stocks? Is it worth the risk to drop my savings into one (with extensive background checks ofcourse) or would long term dividend returns be a wiser investment?
Never put all of your money into ANY one stock or security - diversify and spread the money around. And you'll want to keep the vast majority (if not all) of your stock investments in companies with solid fundamentals, whose share prices are above $10 a share.
My thinking is to always think of a number which I am happy to lose out on without being to attached to it. This leads me to knowing that I would be happy to invest a smaller amount and know that when I reach my goal I would leave. Keeping both items in mind, you are less likely to suffer and also as JR Ewing mentioned, always spread your investment!
Yes diversification is definitely good for risk management. I'm leaning towards the idea of having my normal stock portfolio in which I would attempt to buy low and sell high and reinvest the profit, aswell as a small amount on the side as a test on stocks with value under $5. This experience will most likely shape my view of penny stocks and result in repeated attempts or avoidance of penny stocks completely.
I have a number of friends who were tricked into buying penny stocks believing that the prices would go up. But soon after the IPO there was a change in management, and that year the company's profit fell sharply. That's how the stock prices started slipping. Most of them who sold their stocks lost a lot of money. Most people who get into trading penny stocks hoping to make some profits end up losing a lot more than they gain.
I don't really see penny stocks as an investment as such - more a speculative approach. The whole approach isn't for everyone and for the average individual I wouldn't recommend it. But for those that do want to do it then diversification definitely makes sense, particularly diversifying with non-penny stocks.
I haven't ever invested in penny stocks, but I liken them to penny slots. The risk is mimimal, but so are the rewards. I think in order to really benefit from penny stocks you need to be able to be very lucky, or very clever.
It depends on the broker you are using, that is, their reputation. Also if you want to win in penny stocks, look for short trades. You can also win big if you invest in technology companies that seen to have a promising future. For example those who invested in Microsoft as a small company reaped big time. The general rule of investment is to invest only what you can afford to lose and diversification.
It depends on the broker you are using, that is, their reputation. Also if you want to win in penny stocks, look for short trades. You can also win big if you invest in technology companies that seen to have a promising future. For example those who invested in Microsoft as a small company reaped big time. The general rule of investment is to invest only what you can afford to lose and diversification. My gut feeling is that judging by the hurry of most penny stock investors, losses are more than wins.
