How To Invest In Penny Stocks - PowerPoint PPT Presentation


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How To Invest In Penny Stocks


| “Penny” stocks (or micro-cap stocks) are those that sell for $5/each or less. They are associated with high volatility, low liquidity, and vulnerability to price manipulation—but a smart investor can overcome these obstacles and earn a substantial amount of money in the world of penny stocks. – PowerPoint PPT presentation

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Title: How To Invest In Penny Stocks

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  • Penny stocks are often dismissed as excessively
    risky investments that seldom pay off. It should
    be admitted that there is a lot of truth to
    thisbut with the right knowledge and tactics,
    its possible to make a substantial amount of
    money in penny stocks. Having said that, lets
    take a look at penny stockswhat they are, their
    associated pros and cons, and how to go about
    investing in them.

  • Basically, a penny stock is one that sells at a
    low price. Despite the name, these stocks usually
    cost more than a pennythey occupy a range of
    prices. Some cost 1, others cost a fraction of a
  • The Securities Exchange Commission (SEC)
    classifies a stock in this category if is it
    priced at 5 or less.1 Penny stocks are sometimes
    called micro-cap stocks.

  • An over-the-counter stock is one that isnt
    listed on the formal exchanges (e.g., the NYSE).
    Penny stocks often fall into this category, but
    many do not.
  • Over-the-counter stocks are widely considered
    risky because they arent subject to the listing
    and reporting requirements of the major exchanges.

  • Some penny stocks can be found on NASDAQ or other
    stock exchanges, but a great many are not listed
    there. A lot of penny stocks are on the pink
    sheetsdaily publications of over-the-counter
  • You can also find them on the Over-the-Counter
    Bulletin Board (OTCBB). Securities on the OTCBB
    need not meet the listing requirements of the
    NYSE or other exchanges, but they must file
    financial statements with an appropriate
    regulator (e.g., the SEC).

  • Inexpensive Their low price makes these stocks
    attractive to investors who may not have the
    funding to purchase relatively expensive shares
    from large companies.
  • Huge profit potential This benefit follows from
    the first. Because these stocks are so cheap, a
    slight increase in value can be profitable.

  • As theyre listed on the pink sheets, penny
    stocks need not follow SEC filing requirements.
    Therefore, investors may have trouble finding an
    adequate amount of information about them.
    Additionally, these kinds of stocks tend to be
    quite new, with little or no track record that
    investors can consult.

  • Penny stocks are associated with poor liquidity
    and an attendant lack of market activity. This
    means that a trader is more likely to get stuck
    with a stock they cant sell.
  • Lack of liquidity makes penny stocks vulnerable
    to price manipulation. A trader can easily buy
    large numbers of shares and temporarily drive up
    the price to create artificial demand for the

  • To succeed with penny stocks despite these
    disadvantages, you must invest wisely.
  • Do your homework Beware of shell companies that
    seemingly exist only for stock purposes. You want
    to pick companies with solid business
  • Be prudent Dont invest all your funds in a few
    penny stocks. Remember, these stocks are
  • Consult an experienced stock analyst has a free newsletter with a
    proven record of success!

  • has earned a name as one of the
    most trusted and dependable research firms in the
    field of micro-cap and over-the-counter stocks.
    The site offers a weekly newsletter and a variety
    of informational articles.