Penny Stocks

Penny Stocks, Aggressive Stocks, wealth building

The definition of penny stocks may depend on who you talk to. Some individuals will look at the share price, while others will look at market capitalization. Some investors will tell you it is any stock priced at $1 or less, while others say $5 or less.

The official SEC definition is, a low-priced, speculative security of a very small company, that derives its status by a share price of $5 or less.

The lack of information available to the general public is a major hurdle when trying to research these securities. Companies listed on the pink sheets are not required to file with the SEC, making it difficult for a potential investor to make an informed decision.

Also, many small companies are new with very little history, or they have been around, but are facing potential bankruptcy. This further complicates the decision making process.

Liquidity is another factor to consider. The ability to sell your security at anytime for the market asking price, is not always a sure thing with these stocks. Often times, if there is no demand for the security, and the seller desires to liquidate their position, they may have to sell the stock for less than its listed price.

Many small companies pay financial newsletters, radio shows and financial television programs to promote their company. The information provided from these media sources is very biased and often times misleading. I stopped investing in any penny stock that uses paid advertisements.

Let me make it clear, not all penny stocks are busts. I have personally invested in them several times over the years and have made more than I have lost. I have found that many small companies have solid fundamentals and display visible points of resistance and support.

It is part of my investment philosophy to watch and observe stocks. Charting resistance and support points can be very profitable.

Penny Stocks should be researched as thoruoghly as possible. Obtain as much information as you can about these securities before investing.

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The Disclaimer: I am not a Registered Investment Advisor. Everything on this website is my opinion and put here for my readers enjoyment. I do not recommend making financial decisions based upon my opinions. I advocate doing your own research and making an informed decision. I openly disclose ownership in any stock I discuss.

All information I provide on this website is obtained freely via the internet, radio and television. I do not have any deals with financial newsletters of any kind. My income from this website is produced from advertisements plainly displayed on the pages.