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Penny stocks?

Jeffs07

New Contributor
Feb 24, 2008
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Rockingham NC
Thats right, some of the most lucrative and risky ventures in the stock world. Anyone speculate on them besides me?
 

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NerdSmasher

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Read Millionaire Fastlane
Aug 31, 2007
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I have, and plan to more in the future. But, currently, I'm working on options. Either one has the potential for massive gains, however, and Pennies can be quite fun to play, I must say. But, because I can't be at the computer during trading hours, they're a bit annoying at times right now. Options seem slightly more predictable, or slow moving... something like that.

Great stuff, though. Can make a lot of money with little if you're good :) Though, it's hard to make a lot more money with that lot of money, just because you can't get out of the position if it's too big.
 

djs13

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Oct 3, 2007
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I've taken a look at them, but never really did anything with them. Alot of people are against them but I think the biggest thing to worry about it is scams.
 

NerdSmasher

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Aug 31, 2007
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I wouldn't worry too much about scams... with investing in Pennies, your goal is to get in, and get out with a big profit fast. Even if the product is a scam, or the announcement is, you can still profit, and then leave before any negative effects come out of any of it.

And, oddly enough, Pennies usually don't drop too rapidly (unless something is released stating quite blatantly that it is a scam, or something similar). They shoot up fast, and decline relatively slowly... almost the opposite of higher cap stocks. At least in my opinion. Regardless, you still don't want to hold them as they go down, lol.
 

Luke12321

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Jul 27, 2007
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Alot of pumping and dumping goes on with penny stocks. You need to have connections to make money in the penny stock. It is nice to know though before the pump is coming....but even then it is hard to get out quick enough to make any serious money because the dump happens more quickly than the pump.
 

Jill

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Jan 26, 2008
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I agree with Luke. Key indicator is volume. If your volume is the only big trade of the day, you're gonna get nailed. If there isn't someone making a market for them when you get ready to sell, then "oops".
 
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Jeffs07

New Contributor
Feb 24, 2008
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Rockingham NC
Thats the problem Ive ran into several times. The price is up, I think profit time, go to sell and have to sell at below market price due to lack of demand and I lose money to commissions.

A word to the wise, don't use sharebuilder... they charge an absurd $16 in commissions per trade!
 

unicon

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Feb 23, 2008
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Approximately ten years ago I went to a seminar on an MLM for vitamins. The host was Robert Allen who was the author of Nothing Down in real estate. He was promoting a company called USANNA. They had a well laid out plan and Allen was a very good promoter. I found out this was a publically held company and called all over the US to find the stock as it was only being sold by one broker and he had about 175,000 shares left at .50 per share (fifty cents). Being conservative I hesitated and wanted to do new research as I thought the company out of Salt Lake City had a chance to make it even though leery about buying cheap stock. I called the company talked to the corporate controller, I learned this was indeed a spin off of Gull Labortories and the doctor wanted to make the highest quality vitamins (with education) on the face of the earth.

I had all the paperwork in with the broker and kept calling as it went to $3 to $5 to $8 in a matter of months when I finally bought in. Long story short this went to around $50 and split maybe more than once as I haven't kept track in years. With all the indicators in favor this was an opportunity that comes along seldom because of the acceleration. Made alot of money but what was learned was more important. My broker mentioned that a surgeon had bought in for 20,000 shares for only $10,000 of which I naturally could have done the same which translated to $2,000,000. This is only half the story.

During the run up it increased beyond its fundamental value but had become listed on the nasdq and became marginable and optionable in very fast time during the 2000 drop in the market. By selling for a million and buying puts the leverage would have made about $20 million. This is about the power of owns brain, the leverage of knowing what one knows now after the fact, and realizing that everything goes down about 10 times as fast as it goes up. The crash was the perfect vehicle timing for a fast growing stock with decent growth fundamentals. It was a penny stock for a short window and not purchasing early hurt.

The above is similiar to Mark Cuban who sold Broadcom and then bought puts making billions in a two transaction play which put him into a total different league. Penny stocks with good indicators and backing (like a spin off) have the potential to make multi millionaires over night with one Caveat. That you can see what is right in front of you.
 

alaesh

PARKED
Jun 18, 2008
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0
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back in highschool, we had a stock market project, where we had 1000 play dollars to play around with on the stock market. we had to give our reasoning for picking our stocks, and such. me and my friend invested all into one penny stock and lost money. i got 9% on that project.

another team turned their 1000 into 4million and a few hundred though in the duration of the project, which was like a month.
 

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