The Penny Stock Quandry

If you've never heard the term, 'penny stocks', you are in for a treat. If you've heard of the term and never taken advantage of the opportunity they represent, this is for you. If you have a bad opinion of penny stocks, this is for you, too!

It's very strange, just this week a close friend and avid investor spoke of penny stocks as something he had never gotten involved with. Since he's made over a 1/2 million dollars trading stocks in the past 10 years, I wondered why. Penny stocks can be risky if you don't know what you are doing.

Equity trading and studying stocks is something that never appealed to me. Having been raised on a farm, my natural inclination was more to investments in real things like land, commodities and tools. I even tried my hand at trading the foreign exchange, an interesting market for those who enjoy living on the edge.

But back to penny stocks. The potential is so great if only there was a way to choose the right ones! Most are high risk with little chance of profit it seems, but the ones that are good can be exceedingly profitable.

As fate would have it, I have been diligently studying and researching profitable ventures online. Since we live far out in the country, it's not feasible to do any more business in town than we do. Town's fine, but a few hours is enough. The ability to work from my home office, look out my windows over looking the garden, pasture and sunset is motive enough.

Wikpedia defines penny stocks as: "In the U.S. financial markets, the term penny stock commonly refers to any stock trading outside one of the major exchanges (NYSE, NASDAQ, or AMEX), and is often considered pejorative. However, the official SEC definition of a penny stock is a low-priced, speculative security of a very small company, regardless of market capitalization or whether it trades on a securitized exchange (like NYSE or NASDAQ) or an "over the counter" listing service, such as the OTCBB or Pink Sheets. The terms penny stock, microcap stock, small caps, and nano caps are sometimes all used interchangeably, however per the SEC definition, penny stock status is determined by share price, not market capitalization or listing service."

"Many new investors are lured to the appeal of a penny stock due to the low price and potential for rapid growth which may be as high as several hundred percent in a few days. Similarly, severe loss can occur and many penny stocks lose all of their value in the long term. Accordingly, the SEC warns that penny stocks are high risk investments and new investors should be aware of the risks involved. These risks include limited liquidity, lack of financial reporting, and fraud."

So with that sorrowful background, I submit to you that there are ways to take advantage of this particular market. The advantages are 1. The potential for dramatic returns on investment 2. Low cost of purchasing shares - typically they are priced under $2/share and many under $1. and 3. There is a proven system for analyzing these little gems which takes all the pressure off.

SIDE NOTE: BEWARE Unscrupulous promoters... "Many Internet users have been exposed to e-mail spam promoting penny stocks. Approximately fifty-five billion unsolicited e-mail messages are sent each day, a significant proportion of which tout penny stocks, usually as part of a pump and dump scheme[citation needed]. According to a study conducted at Oxford,[19] 15% of all spam was related to penny stock fraud. According to the study, "People who respond to the "pump and dump" scam can lose 8% of their investment in two days. Conversely, the spammers who buy low-priced stock before sending the e-mails, typically see a return of between 4.9% and 6% when they sell."

The pennydoubler.com is not related in any way to these illegal and immoral schemes. The program uses a robot to make technical analysis, which is combined with human charting and fundamental analysis. Stock picks are made through a weekly newsletter.

One other advantage to this particular system is that one can start with a very low investment, under $100 if they wish. All trades can be done online or over the phone to a reputable broker. It is a fun and exciting part of the overall equity market.