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Posted: 4/15/2006 10:05:26 AM EST
[Last Edit: 4/15/2006 10:06:46 AM EST by Knife_Sniper]
I have a few hundered and would like to invest in some penny stocks. I am still doing reading up on the subject and this will be my first time in the market. I am not afraid to lose my bills at this level, so this is kinda like getting me feet wet in a somewhat aggressive market.

Anyone a penny trader? Just doing it to play around with my money a bit and get a feel for real investing when I am out of college.

Oh and what would be a good type of penny stock to invest in and what are some types to avoid for a beginner?
Link Posted: 4/15/2006 10:07:22 AM EST
They are thinly traded, may not get a bid when you want to sell, or a very low bid, they are easily manipulated by unsavioury types, not a lot of research available on the companies being traded. Enter at your own risk.
Link Posted: 4/15/2006 11:06:03 AM EST
Penny stocks are a sure way to lose money if you don't know the market or have the tracking tools.

Do yourself a favor, and go with Home Depot or Lowe's or something else that has a self-buy-in program (no broker needed, so no buy/sell penalties) and pays dividends with an automatic reinvestment program. Get the auto-reinvest option, and leave it in there to compound.

Or, put it into an Orange savings account at 4% yearly compounding.
Link Posted: 4/15/2006 11:09:23 AM EST
[Last Edit: 4/15/2006 11:11:02 AM EST by U_Down_Wit_OPP]
Their liquidity sucks ass (ever had a stock where your sell order didn't have anyone on the other end to meet it?) and are subject to wild spikes in either direction.

If you have an idea about a particular stock that might be classified as a "penny stock" due to it's trading range, that's one thing. If you are asking a philosophical question about the broad concept of "penny stocks" because you don't have anything specific in mind, i'd say to stay away. They're for the sharks and the suckers. Sometimes, there are very rare occasions when they can be good, but since you just asked about "penny stocks" rather than about a stock in particular, that tells me that they probably aren't for you.

Better off betting on black at the roulette table.
Link Posted: 4/15/2006 11:11:36 AM EST
I never understood the point of penny stocks.

Buy 10,000 shares and it goes up 10%....great.....10% gain.

or

Buy a few dozen share of some company you actually know (and is actually a "going concern") it goes up 10%...great....you're up 10%.


Here's the difference....someone with way more money than you can actually "move the market" in a certain penny stock, effective fucking all of the small players.

Yes, the market can be moved in "regular" stocks, but not to the same extent by one individual.



Link Posted: 4/15/2006 11:18:08 AM EST
[Last Edit: 4/15/2006 11:19:30 AM EST by U_Down_Wit_OPP]
The thinking behind penny stocks is that your investment allows you to leverage a greater number of shares, which in turn allows for a greater gain when prices fluctuate.

If you buy 100 shares of GM @ $20 a share, and they go up $1 per, you just made $100.
If you buy 10,000 shares of WTF Biotech .20 cents a share and they go up .05 per, you just made $500.

The issue has to do with the likelihood of WTF Biotech gaining a nickel versus GM gaining $5 per share in order to produce a similar degree of growth.

Shitty little penny stocks DO spike by 20% in a day, the issue has to do with liquidity when it comes time to harvest.
Also, shitty little penny stocks DUMP 20% in a day. Good luck trying to cut your losses on a spiraling penny stock.
Link Posted: 4/15/2006 11:28:05 AM EST
+1 on the ING Direct Orange savings account...

1. savings
2.401k if available
3.roth ira
4. mutual funds
5.stocks

This works out best for me.
Link Posted: 4/15/2006 12:16:21 PM EST
I think it is a bad idea to "invest" in anything that you know nothing about. Whether it be a particular stock or mutual fund or bond, you should have some reason for picking that investment, IMO.


Link Posted: 4/15/2006 12:21:21 PM EST
Penny stocks performance anaylsis:

They go up a penny ...... you can GET RICH ( if you own enough of them )

They go down a penny .... and you can go BUST
Link Posted: 4/15/2006 12:38:02 PM EST
[Last Edit: 4/15/2006 12:38:15 PM EST by Knife_Sniper]
alrighty then!
Thanks for the input


Link Posted: 4/15/2006 1:47:06 PM EST
Hmm, Maybe I am just lucker than most. For a couple of years there, when I had the time to watch stuff, I found penny stocks were a good way to double my money.
Only once did I not double my money, but got out even.
Again, I had time to watch them, and research them quite a bit.
There are boards out there where the people know or talk to people in the companies. It helps to know the area they are doing business in. For instance, all the others in that line of work have stocks on the regular market. Or they all are in the penny stocks.
I usually had about 1k to invest, and watch the market like a hawk the whole time my money was in. As soon as it doubled, I got out. Once it took a year to get my money out. But like gambling, don't wager more than you can afford to lose.

The only bad one I picked was Golden books. Made all sorts of kid books. Looked like they were going to turn around. Got wind of some major announcement on the boards, and the stock took off. I dumped out about half way up. Enough to break even after all the broker fees, and they decided to go bankrupt. The stock dropped until they had to suspend trading. Could have made money by short selling then, but didn't know enough to do it then.

The one big one I could have had but didn't (because I listend to people like the ones posting here,) was a company that was almost out of money and needed a new loan to take off. Stock was like .20 cents. Had I put my 2k into it, I would be very well off. Stocks went to 5 bucks a share, then 35 bucks a share, then they were bought out. Oh well.
Link Posted: 4/15/2006 2:03:04 PM EST
[Last Edit: 4/15/2006 3:30:28 PM EST by VoodooChile]
Savings accounts are the complete other end of the spectrum from aggresive stock..They are safe but you won't make much if anything. What you make won't be protected from taxes. If you are sure about being able to lose this money then take some time and read a few books about high risk investing..Penny stocks are dangerous and there are other types of up and coming companies that you can invest in with a better degree of stability.
Link Posted: 4/15/2006 2:16:40 PM EST
where can you go toview penny stocks? i couldnt find anywhere to check on penny stocks :)
Link Posted: 4/15/2006 2:47:51 PM EST
wow orange is damn good, 4% on savings...

Link Posted: 4/15/2006 3:05:39 PM EST

Originally Posted By Orion_Shall_Rise:
wow orange is damn good, 4% on savings...




Yes, they are what I use. Good rates and excellent customer service. I'd recommend them to anyone. 4 cents on every dollar is an excellent rate for savings. I don't know of anything higher out there (speaking strictly for savings).
Link Posted: 4/15/2006 3:29:09 PM EST
The thoughts "scam" "bankrupt" and "fake" always occur to me the few times I ever think about pink sheet companies
Link Posted: 4/15/2006 3:37:16 PM EST
If you want a halfway decent penny stock look for what will be needed in the future. Service based companies with longterm contracts are a sure win. For instance PBLS.PK is a pennny stock which is involved with contrcts for rebuilding New Orleans as well as prospecting oil sands in nevada among other places. This type of stock can see tremendous growth but there is always a risk.
Link Posted: 4/15/2006 3:43:46 PM EST

Originally Posted By jhgray2:
If you want a halfway decent penny stock look for what will be needed in the future. Service based companies with longterm contracts are a sure win. For instance PBLS.PK is a pennny stock which is involved with contrcts for rebuilding New Orleans as well as prospecting oil sands in nevada among other places. This type of stock can see tremendous growth but there is always a risk.



I should have edited my previous post IBTPWBLOPSTULFASTBI (In before the people with boat loads of penny stocks to unload looking for a sucker to buy it)
Link Posted: 4/15/2006 4:42:06 PM EST
[Last Edit: 4/15/2006 4:42:36 PM EST by silverc]
There is usually a good reason why the stocks are worth so little. No growth, poor earnings potential, accounting 'irregularities' etc. Stay away and stick to good stocks and good companies that you have researched.
Link Posted: 4/15/2006 4:50:51 PM EST
Penny stocks are a sure way to lose your shirt and not something that should be done lightly. Unless you want to get serious I would just take whatever money you have plans to invest in them and send it to me or just light your grill and burn it now. Most experts consider anything under $5 a share a penny stock. That being said there are many stocks in the $1-$5 range that would be good investments. I made good money on Sirius (SIRI) when it was in the sub $2 range.

Then there are the pink sheets. These are non-reporting companies and very risky (see grill reference above). The risks are great and the rewards can be great. Stocks on the pink sheets don't follow the normal rules. Throw the normal trading rules out.

By this I mean:

Good news normally makes a stock price go up. On the pink sheets it can also make them go down.
Take press releases and forward looking statements with a grain of salt.
Beware the reverse split!!

By getting serious I mean:

Do lots of research (due diligence) and paper trade some pink sheets for awhile.
Invest in a service that can provide level II quotes on pink sheets. Without level II you are half blind.
Limit your prospects to stocks which show a high trading volume. Easy to get in and out of those since they trade so actively. Like other stocks, the idea is to buy low and sell high. Level II quotes can help identify stocks that are getting ready to move by showing what the market makers are buying and selling at. Best strategy is get in early, ride the wave, make your profits and sell out to other suckers getting in late.

Good luck. For every QBID there is one or more CMKXs.
Link Posted: 4/15/2006 4:55:19 PM EST

Originally Posted By Journier:
where can you go toview penny stocks? i couldnt find anywhere to check on penny stocks :)



www.pinksheets.com

Link Posted: 4/15/2006 5:06:11 PM EST
[Last Edit: 4/15/2006 5:09:51 PM EST by raven]

Originally Posted By TRW:
Most experts consider anything under $5 a share a penny stock. That being said there are many stocks in the $1-$5 range that would be good investments. I made good money on Sirius (SIRI) when it was in the sub $2 range.



Damn straight. Did you know FLIR, the company that makes FLIR equipment for the military, traded for like $4/share in early 2000? I couldn't fucking believe it then. Check the price now.
Link Posted: 4/15/2006 7:28:46 PM EST
[Last Edit: 4/15/2006 7:49:00 PM EST by PeteCO]
Nestle is a pinksheets stock, IIRC

Hell, with all the bullshit and expense that is Sarbanes-Oxley, I'd think long and hard about taking a company I owned public unless it was huge.
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