Thinking Of Buying Penny Stocks
Thinking of buying penny stocks? Be careful of which ones you’ll want to invest in. A penny stock is a stock that is sold by a company that is either new or the company is trying to raise capitol for basic operation or expansion. They are referred to as penny stocks because the value is less than $5.00. Many different brokers offer penny stocks that are traded on the OTCBB (over-the-counter bulletin board). You can also subscribe to an on-line service. You know the ones, that tell you that they’ve invested in a company that the value grew 5000% in a short time.
The issue with buying penny stocks is that it is very risky. The statistics for investors who trade penny stocks and lost money is some where near 70%, so the odds are against you. You also need to be aware that there are some brokers who will inflate the stock by dishonest practices. You need to research the broker who offers these stocks just as much as you do in the stock itself. If they claim to having insider information, that is a sign that you need to walk away from that firm. The only way to find a good penny stock to invest in is to consult with a broker, but be careful they make money by make sales and may only have their own interest in mind. There is big money in trading penny stocks for these guys and to do that they need to sell you the stock.
Many investors have made a fortune in buying penny stocks, but for every great windfall stock that made millions, there are about nine that lost billions collectively. Look at Yahoo, they were trading at $0.78 a one time and now trade in the $20 range. Like I said though, that’s only one of thousands of companies that are traded every day.
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