2007-12-29 03:27:49 · 8 answers · asked by Steven S 1 in Business & Finance ➔ Investing
Penny stocks are extremely risky and are best suited for sophisticated investors who can afford to lose some money. No rudeness intended, but you're not a sophisticated investor if you're asking this on Yahoo Answers.
If you decide to go ahead, you should be aware that penny stocks are not traded on a normal stock exchange. That means that they are not subject to exchange requirements for financial reporting. They are also not subject to all SEC reporting requirements. As a result, it may be difficult to obtain reliable financial information about these companies.
Also, you should be aware that some penny stocks are very thinly traded and may go for days without shares changing hands. You may have difficulty selling your shares when you want to because of a lack of buyers. This lack of volume also makes it relatively easy to manipulate prices. That's why penny stocks are a favorite of scam artists.
There are plenty of good companies to invest in that will provide good potential returns without the extra risks of penny stocks. Warren Buffett didn't make billions by putting his money into this stuff.
2007-12-29 05:13:03 · answer #1 · answered by The Shadow 6 · 2⤊ 0⤋
Most brokerages will let you trade them. One needs to make extra checks on trading fees as you would likely trade at a higher volume than standard stocks. I don't believe that these stocks are marginable (meaning you can't borrow to buy them) Also, it would be handy to know how much it costs to sell a worthless stock as this is the way these typically go. I've done it. I'm sure some people have done it successfully, but generally, it is considered a gamble and prone to predatory practices such as "pump and dump" due to the low capital that it has to begin with. People will buy the stock, spam it to high heaven (the pump), and dump it once the price gets inflated from suckers. Some genuine good stocks / companies may evolve from a penny stock, but one must be careful. I guess the best odds would be to go with a company with a unique new product with good demand or a very popular /useful one unless you are just looking for quick trading.
I bought one canadian company that was going to produce a sort of protective covering for cd's.. that went nowhere.
I bought one that was developing a special diagnostic tool using sound for engines, etc (not just car engines).. interesting concept, but another product seemed to gain more share.. I think I came out even
I bought one for Golden Books which was likely to be bought at that time.. instead it restructured and then sold off.. oh well.
Oddly enough I ended up doing a project for the former CEO of one of the these companies. Funny "coincidink"? You know what they say about it being a small world.
2007-12-30 02:40:33 · answer #2 · answered by itsjunglepat 6 · 0⤊ 0⤋
You play the chart. The highs and the lows. Stocks go up and stocks go down, so your strategy is to first have a few companies checked out that you believe are legitament, (MINIMIZE YOUR RISK) then watch for the stock to hit around the recent low, then when news comes out or good things are announced and you are up enough to make a considerable profit sell half. If it goes higher sell the other half, it it retraces buy it back again at the low, then sell again when it goes up. The good thing about penny stocks is that even though they are high risk, if you are a disciplined trader, they can yeild high rewards. Never buy more than the average daily volume that the stock trades. Never be greedy, never look back, and if you have strong gambling insticts, DON'T DO IT. Must stick with a disciplined strategy and NEVER INVEST MORE THAN YOU CAN AFFORD TO LOOSE.
Good Luck!
2007-12-29 14:22:33 · answer #3 · answered by *Truth Seeker* 2 · 0⤊ 0⤋
At one time Mickey-d's was a penny stock. There are good finds in the penny stock market. A way I found to invest in these is by using software to pick the likely candidates and by doing some research my self. There is a link below to a good beginners site to learn the basics.
2007-12-29 05:05:16 · answer #4 · answered by jeabwjw 3 · 1⤊ 1⤋
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2014-10-04 04:08:29 · answer #5 · answered by Anonymous · 0⤊ 0⤋
They are "all" high risk stocks. Never invest money you can't afford to loose.
good luck
2007-12-29 03:35:40 · answer #6 · answered by Jan Luv 7 · 1⤊ 0⤋
If there was a good method , we would all invest in them my friend.
2007-12-29 03:31:11 · answer #7 · answered by cedykeman1 6 · 0⤊ 0⤋
not the right market now.
avoid the penny stocks
get a mutual fund.... better investmetn for you
2007-12-29 03:35:00 · answer #8 · answered by Michael M 7 · 1⤊ 0⤋