Tuesday, July 20, 2010

Should I Buy Penny Stocks?

Will I get rich or will I turn Pauper.
All all the nano stocks nothing but Scams out to get me?
Is it wise to buy Penny Stocks?

I have made a lot of Money on Penny Stocks.
Lost a Bunch on futures and Options.

There is no correct answer to that question.

I would be wrong telling you that it is not right to invest in a Penny stock as much as I would be wrong telling you that it is right to invest in such stocks.

If you want to get rich from the Stock Market, then there are only 3 ways.

1) Own an Investment firm, like a Mutual fund, or a private equity fund and Invest other people's money. eg: Warren Buffet, George Soros

2) Become a Stock broker and make money buying and selling for others. You always win whether someone buys and sells at a Profit or a Loss. eg: Charles Shwab

3) Just like me, become a Penny Stock Investor.

The Oracle of Omaha became the richest Man in the world several times in a row by making 25% return on his investment consistently.

Now that is a Whopping $ 2500 on a $10,000 investment, which is what an Average Man like you or me can invest to begin with.

If I had a Billion bucks to invest, there won't even be enough Penny Stocks to invest, and even a 10% return on the bluest chip would net me 100 million a year.

But even if I were to beat Warren Buffet consistently on $10,000, when will I ever make my million if I were to follow the Guru and start investing only on the BPs, Lehman Brothers, Enrons and GMs of the world.

Yes, my Friend, investing in Penny Stocks is the only way for a common man to make the Millions from the stock Market.

That said, one should not just jump into the Band wagon and start buying up all penny stocks.

Do your research like all the Big Investors so, but concentrate your research on penny Stocks.

Keep very strict I/O rules. You should very disciplined in your entry and exit rules.

eg: Always be Out at 30% drop and always keep a 20% stop loss once you have crossed 20% gain.

Always invest in at least 1o different stocks.

There are several sites out there that does the research for you.
You can go join those sites and get heir recommendations.

Instead of blindly believing in their forecasts or their past forecasts, join and wait for Month and see how they fare.

Then pick some of the stocks from industry you understand, and look up that site and the Industry.
Information are free and a plenty.

For your own opinion, and take your own decision.
And Keep strict In Out Rules

Happy Investing.

Thursday, June 24, 2010

Best Penny Stock Lists that are Reliable?

Every time you visit a Penny Stock recommendation site, you would see a list of stocks that have grown 300% since they recommended. I could make a list anyday.

Those lists are as good a quack medicine for AIDS. No doubt that there are hundreds of thousands of stocks that have shot up 300-400% even in the past one week, but did they really recommended those?

If yes, how many stocks did they recommend? If they recommended a 100 stocks and only 20 stocks shot past the 100% mark, what need would that list have been to you? If I picked 200 stocks that are all in the electric cars market today, some of them are bound to shot up soon. The trick is in knowing which? Does this penny stock guru know which?

The trick in choosing the best penny stock recommendation site is this:

To make some money in the Stock Market, you don't need to be right all the times.
You just need to be right 51% times, and as long as you have strict stop loss, you will always make make at 51% correct prediction.

Ditto for the Gurus, if they can predict more than 50% times correct, then that is a Penny Stock List that you can follow.
Join a newsletter or a site for one month, and study the movement of its stocks.

One more thing about these lists is that if the site has too many subscribers, prices tend to go up the first few days of the recommendation just because all his subscribers are buying. Beware of that.

The reason I love these penny stock lists is that you can make a few bucks if you can get the list fast enough.
And if the list is small enough. Don't expect a make a lot of money though.

Penny stocks don't tend to have a Huge volume, and there are Automated traders who waiting to offload his stock once there is some volume.

Even the price of STK goes up from .30 to .60 overnight, i's 100% gain could have been on a volume of just 10000 stocks.
That is just 3000 dollars between all the traders.

Don't trust that Penny Stock list blindly.
Enter Fast and Exit fast.

I once had a moderately volume stock that went from .5 to 80 bucks, and I rode the train, but I entered and exited more than 10 times. I would have made a lot more if I stuck to it, but I followed my strategy. You must always exit.