Thread: Are penny stocks a good start for risk investing?

Penny stocks are not "a smaller version of the stock market". They are more dangerous, volatile, and carry ALOT more risk. And no, I would not reccomend them for a beginner. If you are seriously interested in getting started in the stock market, pick up a few books, open your browser and go to your favorite internet search engine, type in "getting started in the stock market" or "stock market investing" and start READING. After a few weeks of reading and taking notes until youve learned the basics, head over to investopedia and open up a simulator account (ie an account that lets you invest/trade with FAKE money). Then you can start practicing a little to wet your feet, so that you understand how the mechanics of the market (executing trades) work.

In my experience, 99% of people who jump into penny stocks as their first venture into the stock market, do so because they like gambling or because their eyes got wide hearing about a stock that was pumped up 1000% in 2 days (the "Oh my God if I had only put my $4000 savings account into that stock I would have a fortune today!" syndrome). I regret to say that out of all of my friends who I have helped get started in the market in the past few years, MOST of them with this syndrome go broke very, very quickly. The ones who get good at playing the market and who DONT have a mentor to hold their hand early on....do what I mentioned above.

Making money your first few months/years in the stock market is nice, but the lessons you will learn early on are worth x10 any cash you might generate. Dont look to "make a quick buck", playing the pennies and hoping to get lucky right now. Learn to invest and trade the RIGHT way, so that you can make money for the next few decades doing it.

Good luck.

Originally Posted by Bozigian

I am new to investing and was thinking about signing up for Scott trade but I want to not spend so much money on stocks so fast. Penny stocks sounds like a smaller version of the stock market so do any of you invest in penny stocks or do you recommend it for beginners. Would website would you advise to open an account for penny stocks?

Do you think penny stock investing has changed much since you asked the same question a couple days ago and we all told you how bad of an idea it was?

Originally Posted by Jonleehacker

Do you think penny stock investing has changed much since you asked the same question a couple days ago and we all told you how bad of an idea it was?

Damnit! I must have missed that gem of a thread! lol And here I go and wasting time typing a long reply because I thought the OP needed some serious advice!

Jonleehacker you are wrong. This is the second post I have ever asked in this website. I registered for this website yesterday. This is the my first post besides my introduction. The is the first post of mines that has the word "penny stocks" included.

So Jonleehacker, you have me confused for somebody else.

Penny stocks are great for RISK investing. I usually like to pursue profit investing, and penny stocks aren't very high on that list. Alpha, is excess risk adjusted return. That's what you want to pursue.

I think you are taking a step to make your career successful. In Global penny stocks, you will make good stocks.

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Everytime I look back at my threads.
I am amazed at how much more I know now.

I know more about penny stocks and large cap stocks.
I know the different brokerages now.

Has anyone here successfully profited from penny stock investing?

Investing? Nope. Trading? yes very nicely. A penny stock is anything below 5.00 and I've made nice money off of 2k and less from buying them. Lowest I ever bought was a .004 one that hit .0142 in 2 weeks. That said sub-pennies always gave me the most trouble and don't seem to do so great now. I stick to the .10- 2.00 Range.

@Wallstreet

Do you buy penny stocks that people talk about like Tim Sykes/message boards?

Or you research on your own and then buy some?

I buy my own mostly, but I also have an email account that gathers all of the letters at once and check them daily as well. Sometimes they are good picks its just that everything has to be verified. One thing to watch out for is their disclaimer and compensation. If they were compensated in shares, or the amount is very large you have to assume the company is planning on selling shares soon to make their money back.

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Originally Posted by Bozigian

Everytime I look back at my threads.
I am amazed at how much more I know now.

I know more about penny stocks and large cap stocks.
I know the different brokerages now.

Has anyone here successfully profited from penny stock investing?

Yes. Although as I have said before on here, it is just one part of my portfolio. I also invest in large caps of course. The micro's take time and can frustrate you to no end, but if youre willing to invest the time in researching them and "dig through all the crap", when you find one...it can be like finding buried treasure in a landfill.

I have made a significant amount of money investing in the pinksheets. It has become a major hobby of mine, and I love the chase of finding a good one.

By the way Scottrade commissions are higher than Zecco for no reason. I dropped Scottrade and never looked back. I expect something in return for paying more.

It doesn't fit the Fastlane method at all. You have no control. And it's high risk. It's the same as becming a "black jack player"

Now where it can be lucrative is beijng a company you list on the penny stock board...

Man...stock market is where you invest your wealth not create it. I know. And it was pretty clearly laid out in his book. I agree 100%.

If you've got dead money or risk capital, take out a fraction of it and take quality stock trading lessons before risking any. Do not just dive in. The risk is in the trader who lacks the right education: Ineptitude is a great killer.

Keep out of penny stocks. Keep to stocks greater than aobut $20. They trend better.