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There are many good penny stock
investments available, which could turn a small amount
of capital into a small fortune very quickly. However,
to discover these you need to know what to look for
and what to avoid. When searching for that one big
payoff, steer clear of the following examples.
The Phone Salesman - Anyone who is attempting to sell
you investments over the phone should be considered an
enemy. They have high-pressure sales tactics, and
effective, believable arguments. However, they are not
doing you any favors, no matter how good they make an
investment sound.
They are operating in their best interest to dump
over-the-counter stock on you, and the money you pay
in will go into their own pockets, or the pockets of
their company.
There has never been a need for good companies that
are going places to resort to these type of tactics,
but there has always been a need for poor, sinking, or
shady companies to do so. If you choose to ignore this
advice you deserve what happens to your investment.
You may also run into difficulty trying to find a
buyer for your shares once you decide it is time to
sell.
Very Low Volume Stocks - Without much trading activity
it becomes increasingly difficult to buy or sell for
the prices you want. As well, it becomes nearly
impossible to get an understanding of where the stock
price is heading, or to calculate fair valuations for
the company’s stock price.
Not only that, but companies subject to low trading
volume generally do not have a lot of positive
interest.
The Hot Tip Stock - There are actually professional
promoters who make a very good living generating and
nurturing rumors about some penny stock that’s
guaranteed to go through the roof. The entire concept
hinges on the rumor being spread from person to
person, at the office, over the phone, or at social
venues.
The promotional ploys can be very costly for investors
who get involved without special knowledge about the
company or the actions of the promoter. In most cases
if a stock really is going through the roof you
won’t hear a word about it, because a select few
individuals will be very intent on keeping the
information to themselves.
Guaranteed Performance - If a stock is guaranteed to
go up, it will almost always go down. Nothing is ever
certain, especially on the stock market. When someone
guarantees certain performance out of a stock, they
may be a promoter, naive investor, self-serving
broker, or have heard the guarantee from another
source. In any case, don't believe them. Instead check
into the company yourself and if you feel it is a good
investment, you may want to proceed.
Sinking Ships - When a stock has dropped a lot you may
think that, "it can’t go any lower," or
that it is "a good bargain." Especially with
penny stocks, you need to avoid this type of thinking
because many sinking ships don’t ever rebound, and
they can go lower, and they aren’t good bargains
just because they cost less than before.
Commission Free - If you are interested in getting
stock commission free you may think you are saving
money, but it generally means that you are buying over
the counter stock directly from a promoter or the
company.
Either way, they take their own invisible
‘commission’ from you, either by selling to you
for an arbitrary amount which is unfairly high, or
selling to you for the asking price rather than the
bid price based on their own current valuations.
International Penny Stock - We’re not talking about
living in the U.S. and steering clear of Canadian
stock, or vice versa. We are talking about penny stock
issues from Africa, Australia, European, Russian, or
South American penny stock markets. First of all, you
won’t be too impressed with the level of investor
protection and exchange honesty in some of these
regions, and you most certainly won’t be too
impressed with the broker fees you incur when trying
to purchase internationally.
Besides, if you can’t find good penny stock
investments in North America, you won’t be able to
find them anywhere else either.
Warrants and Rights - These are not technically
stocks, but instead are derivative investments based
on an underlying company's shares. However, they often
appear like penny stocks because they sometimes get
listed in the stock pages, and often trade for
pennies.
It is unlikely that you will accidentally purchase
derivatives, but make sure you know what you are
trying to buy by understanding the listing criteria of
the paper you are reading, or verifying your purchase
with your broker.
To get free information about investing in penny
stocks visit http://www.pennystocks.com They offer
information on the definition of penny stocks, getting
started, benefits, risks and how to find a good penny
stock.
By www.pennystocks.com
Peter Leeds, one of North America's leading
Investment Coaches, is a self-made millionaire who has
created his fortunes on the stock markets. He has also
empowered thousands of individuals to do the same. His
personal success and incredible ability to
consistently pick money-making stocks has earned him a
loyal following of successful investors and has
generated significant attention from the financial
world.
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