Penny Stock Picks
For some time, I’ve been doing research on many of these websites that offer you free e-mails that will inform you on buying penny stocks that will make you money. It’s amazing how many websites are out there that are doing that exact thing. But are they really helping anyone make any money with their penny stock picks?
Let’s start with the concept of someone giving you free advice on which stock to buy and when to buy it. What’s in it for them? That’s the first question that comes to mind when I think of these websites. If they send you free e-mails and don’t ask you for any money on return, then how do they make their money? To get one thing straight… getting a tip on a stock is not the way to play the stock market. You need to do your own research on the stock that you are looking to purchase. Don’t be what I refer to as being a penny stock chaser.
These websites are more designed to get others to buy into stocks that they’ve already set up a position in and are waiting for the “new” investors to jump on the band-wagon and cause the price to go up. When that happens, they will scale out of their position and leave those who are not as quick to get out before the price drops back to where it was.
In my research of these websites, I signed up for their e-mails and track how the stock moved. In many of these cases ( over 85%), I would never own or invest into any of these stocks. Their balance sheet and the financial reports of these companies did not look good. As a matter of fact, one company in particular WDAS.PK, was being hyped by three different websites. What did the stock do from the e-mails? What happened was unbelievable. The first alert was on Sunday Oct. 11th. Telling their subscribers to buy at $0.05, but when the stock opened on Monday it was at $.40. Updated alerts went on stating that the climb wasn’t over and to buy at $0.40 – $1.20 per share. I will say that those who timed it well, made a ton of money if they sold their shares around $1.85 – $2.00. It hit a high of $2.00 before closing at $1.85. In just two trading days it closed at $0.48.
During the entire 10 trading days from when they first talked about WDAS.PK, the stock went up and back down again to where the ride started at. As of this past Friday, Nov. 20th, it closed at $.20 per share. Was it good to “play” this stock tip? Only if you were able to watch the day to day activity of the stock, was it worth it. The stock came down a lot quicker than it went up. I’m sure many didn’t get out in time and suffer a loss.
My advice to you is to do your own research and not to take anyone’s advice at face value. Just because someone or some website says it good, doesn’t make it so. I know it may be harder to do research on companies that trade on the pink sheets because usually these companies don’t have analyst watching them. Some information is out there, but you have to watch for fluff articles that publicist put out to help boast interest in the company.
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Buying Penny Stocks
“What is a penny stock?” This is a question that is asked every day. The answer depends on who you ask.
Typically a penny stock is a stock that is valued at less than $5.00, but others say that it’s less than $1.00. Buying penny stocks can be a profitable venture or a losing proposition.
Penny stocks are stocks of a new company that is trying to raise capitol for one reason or another. Since they are new and small, the information on these stocks are limited and may have restricted liquidity. Also a financial report could be hard to find on that particular company. The risks involved in trading them can vary. The stocks are not as active compared to others in the market which makes it hard to predict.
A penny stock can move up or down by 50% or better in a single day. This does make trading penny stocks quite attractive. To reduce your risks, you need to do research on each company that your looking to invest in. Do not trust someone else’ research, many brokers will inflate numbers to look more attractive than they really are and in doing so you can lose everything that you invested
Many people who are buying penny stocks are usually considered day traders. They’ll buy a stock one day and wait for the gains that they are looking for and sell the next day. They also tell everyone that they know that this is a great stock just so you will invest in the company causing the price to go up to where they will get out with their profits and leave you high and dry. Anyone that tells you that they have some great insider information on a company and that you should get in on the action, is someone that you shouldn’t be listening to in the first place. It’s illegal for anyone who has information that has not been revealed on a company to pass that info to someone else.
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