Anyone have experience with Penny Stocks?

[kimmerspixelated]

As a novice to investing, I know next to nothing, but I am impressed with some of the buzz lately about some of the super cheap stocks. Just wondering if anyone has advice.

[sabbat hunter]

yes

dont invest in them unless you REALLY know what you are doing. Penny stocks are made for those experienced day traders, so that if the stock goes up a nickel they have made a fortune.

If you don't know anything about stocks, avoid the penny stocks.

[cloudbase]

1. You've got to move tons of rock to find

just one diamond. With the penny stocks, the odds are historically against you, but that doesn't mean you can't find that diamond. Whatever you do, don't use the rent money for investing.

I spent several years as a trustee of four Taft-Hartley benefit plans that were worth $1.8 billion. We never went the penny stock route. The key was a highly diversified portfolio of stocks and bonds, and good professional advice.

[Turbineguy]

21. 1.8 Billion!

The guys who took over from Cloudbase brought that portfolio down to a more manageable size!

[BrklynLiberal]

2. Professional advice I received: Stay away from them, especially being a novice.

[Turbineguy]

3. Penny stocks

are the whale shit of the investing world.

Most of them are losers but on occasion some make big. Just like on occasion somebody will win the jackpot at the casino.

Here a nice advert for a job:

http://www1.rozee.pk/job-details.php?jid=25882&apply=Y

If you want to make money in penny stocks, that's probably the best way.

However..... if you want to play the penney stocks, limit your risk to about 5 percent and don't invest what you aren't willing to lose.

[mcscajun]

4. Yes. I would avoid them. They are not for novices, or indeed, for

the experienced, but faint-hearted.

[BlooInBloo]

5. Nope. Some non-real alternatives to gambling....

(event prediction market)

Eve (a mmo, but with a large market, which gets studied by some grad econ students, but I don't know if its contact system is flexible enough to allow derivatives.)

And of course the granddaddy of them all: http://www.roninsoft.com/wsraider.htm">Wall Street Raider.


EDIT: There's a good article about the performance of the stocks suggested by email spam. Unfortunately, I couldn't find it within 30 seconds of googling.

[Mike03]

6. Be Extremely Cautious

I work with a professional investment advisor. As a rule, we avoid such stocks like the plague. Sometimes, for amusement, I will try to monitor a penny stock in some attractive sector--say Uranium or gold mining or petroleum exploration--but I would not personally invest in such a stock unless a recommendation came to me from an individual I trusted and had experience dealing with who had some knowledge of a sector and extensive knowledge of the company's balance sheet, executive management, debt, investors, etc...

Be especially wary of those mail-outs that sometimes land in your mailbox or come across the fax.

PS

Oh, and research, research, research.

[BadgerLaw2010]

15. Mail outs are illegal, by the way. Report to the SEC *and* avoid the stock.

Pump and dump scam. No one actually gives away "hot stocks" for nothing.

[bbinacan]

7. I was a professional investment

advisor for 18 years and I would advise that you stay away from penny stocks.

[KoKo]

8. Yeah...STAY AWAY unless you like to Gamble in Vegas!

[BadgerLaw2010]

16. I suspect if it was calculated that several Vegas games would have better odds.

The risk of total ruin in this shit is enormous.

[Snarkoleptic]

9. A great many of us will soon have such stocks in our portfolios...

if Chimpy McFuckstain continues to devalue the dollar.
Let's face it, we've overdue for a major recession. Housing could bring this on the rest of our economy.
We normally have a recession right on the heels of an inversion of the bond yield curve.
IMHO * is staving this off by printing money for his overseas adventures (which has the dual effect of weakening the dollar).
The consumer has driven our economy for a very long time, but guess what?
The consumer is tapped out!
The fat is in the fire and the hog is in the tunnel...ho ho!
A shitstorm cometh and the Repukes have looted the treasury, meaning more gianormous deficit spending.

[girl gone mad]

10. As pretty much everyone else has said..

avoid them.

And if you're foolish enough to gamble with one, be prepared to sell as fast as possible and cut your losses (or, much less likely, potential gains). These stocks are generally momentum plays.

[L. Coyote]

11. They make good wallpaper. Handy in the outhouse too.

If you are biologically talented, you can grow mushrooms with them. :rofl:

[midnight]

12. There is a web site called Penny stock hunter .com I wish I knew

how to transfer a link over, but several months ago, I thought I would research this area.

[Wcross]

17. Here?

http://www.pennystockhunter.com/

Is this the site? Looks like it is a guy trying to sell a newsletter.

http://www.google.com/search?sourceid=navclient&ie=UTF-8&rls=GGLJ,GGLJ:2006-47,GGLJ:en&q=Penny+stock+hunter+%2ecom+

This is a Google search for it.

[BadgerLaw2010]

13. You're a novice investor, eh? Stay the HELL away. Period.

Unless you can spot the sucker in the room with more dangerous investment plays, you're probably him.

Novices should avoid day trading, naked options, penny stocks, lightly traded small cap stocks, pink sheets and anything else that looks like it has tremendous return if you're "smart."

Yes, some people get rich at these things, but each one has a pyramid of carcasses underneath him.

[high density]

14. Just don't do it!!

If you want to speculate in stocks, go buy a mutual fund over at Vanguard. Purchasing individual stocks, especially penny stocks, is a very risky proposition. Any "buzz" around penny stocks probably originated in freaking email spam.

[mnhtnbb]

18. If you'd found Nutrisystem as a penny stock--you'd be up

7000% in 5 years.

I suggest the Peter Lynch approach--look around you and see what's selling that you know and understand. Stay away from penny stocks! I made some good returns from buying eBay when it first went public because I loved the concept and used the site myself.

On edit: don't get greedy. If you find a good stock and ride it...don't be afraid to take your profits and be happy with them.

[amandabeech]

19. From a former securities lawyer, STAY THE @#$%%%@!!! AWAY FROM THEM,

unless you can afford to lose every single penney of your investment!!!!!

That's what the SEC makes them put on their selling materials (called a prospectus), and they mean it. And I mean it.

If you get a general solicitation in the mail, call the SEC pronto, and don't give them at dime, as an earlier poster warned.

Never, ever, ever invest any money without seeing the prospectus, which has lots of pages and detailed information about the investment and the company's finances.

If you can't understand the prospectus, don't put your money down.

There are thousands of slick articles out there trying to part you from your money. STAY AWAY FROM THEM!!!

[Wcross]

20. They are too thinly traded to play with.

You want a stock that trades over 100,000 shares a day or better. With penny stocks you don't get the volume or the liquidity of a listed stock. You may want to sell yet find no buyers.
Many penny stocks have nothing but an idea as an asset & no earnings to determine value. They are often hyped to people hoping to make a quick buck. The old "Pump & dump" scheme is part of the game.

Also, watch the movie "boiler room" to get an idea what you're dealing with. (in typical Hollywood
fashion)

May I ask a question FitzmasAgain? What is it that attracts you to "cheap stocks" as opposed to listed stocks? If you are serious about investing and are seeking to educate yourself there are many resources. I recommend http://www.tradersbrain.com/