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Penny Stocks

ashenbloodashenblood Acolyte
edited February 2011 in Life
Are they profitable? Theoretically, one could make much more money, because it is possible to buy huge numbers of stocks. Even small increases in price result is massive gains. However, I've heard that they are also extremely risky, and most will go out of business in a matter of days. What's your perspective on the risk vs. potential reward?
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  • DaSkipperDaSkipper Regular
    edited July 2010
    How the fuck are they risky? Its a penny, you'll live.
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  • AzureAzure Acolyte
    edited July 2010
    DaSkipper wrote: »
    How the fuck are they risky? Its a penny, you'll live.

    Companies with small amounts of equity have a harder time surviving.
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  • DaSkipperDaSkipper Regular
    edited July 2010
    I know but its not really risky. Risky means like something terrible can happen, not that you can lose 10 cents.
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  • ashenbloodashenblood Acolyte
    edited July 2010
    Say stock A is selling for .01 a share. If I buy $1,000 of shares, then I have 100,000 shares. If the value increases by 5 cents, I just made $5,000. To the best of my knowledge, variations this small occur daily in the stock market, simply due to investor speculation (some investors think the company is going to be successful, the price rises). Compare that to a stock selling at $10, and I don't see why anyone would invest in the higher priced stocks. So my question is, why doesn't everyone invest in the cheaper stocks, and is there a way to "beat the system", or escape the setbacks that (probably) exist with cheap stocks?
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  • DirtySanchezDirtySanchez Regular
    edited July 2010
    Walmart shares started as a penny stock:p
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  • AzureAzure Acolyte
    edited July 2010
    DaSkipper wrote: »
    I know but its not really risky. Risky means like something terrible can happen, not that you can lose 10 cents.

    You can't invest .10 in the stock market you twit.
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  • superspeedzsuperspeedz Acolyte
    edited July 2010
    ashenblood wrote: »
    Are they profitable? Theoretically, one could make much more money, because it is possible to buy huge numbers of stocks. Even small increases in price result is massive gains. However, I've heard that they are also extremely risky, and most will go out of business in a matter of days. What's your perspective on the risk vs. potential reward?

    Its a bit hard to generalize about them, as with all securities you have to look on it compared to other comapnies in the same industry, price range, and general market trends. I've made a fair bit of money on a few penny stocks, however you really need to pick them and choose them and do your research combined with due diligence and proper analysis.

    The question you're asking isn't one that can be answered, its like asking are stocks at price range x profitable?
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  • AzureAzure Acolyte
    edited July 2010
    superspeedz wrote: »
    Its a bit hard to generalize about them, as with all securities you have to look on it compared to other comapnies in the same industry, price range, and general market trends. I've made a fair bit of money on a few penny stocks, however you really need to pick them and choose them and do your research combined with due diligence and proper analysis.

    The question you're asking isn't one that can be answered, its like asking are stocks at price range x profitable?

    Penny stocks shouldn't even be considered by someone new to the market, micro-caps are far too volatile, even those that are listed on reputable exchanges(many penny stocks are traded OTC) to make them worthwhile unless you have a very large, diverse portfolio and can afford to take on such risks.
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  • ashenbloodashenblood Acolyte
    edited July 2010
    superspeedz wrote: »
    Its a bit hard to generalize about them, as with all securities you have to look on it compared to other comapnies in the same industry, price range, and general market trends. I've made a fair bit of money on a few penny stocks, however you really need to pick them and choose them and do your research combined with due diligence and proper analysis.

    The question you're asking isn't one that can be answered, its like asking are stocks at price range x profitable?
    Azure wrote: »
    Penny stocks shouldn't even be considered by someone new to the market, micro-caps are far too volatile, even those that are listed on reputable exchanges(many penny stocks are traded OTC) to make them worthwhile unless you have a very large, diverse portfolio and can afford to take on such risks.

    So basically, the only way to succeed trading penny stocks is with extensive research and stock trading experience. And even then they are still more risky than more expensive stocks. I think I need to learn more about stocks before I do some retarded shit :D. Thanks for your help:)
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  • AzureAzure Acolyte
    edited July 2010
    Stock-Investing-For-Dummies.jpg

    And I'm 100% serious. A great starter.
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  • ashenbloodashenblood Acolyte
    edited July 2010
    haha I'll check it out. And ask here again if I have any questions. ;)
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  • CrazzyassCrazzyass Regular
    edited July 2010
    Great advice from everyone. They are quite right. There is huge potential for profit, but like with most cases of that there is also astronomically higher amounts of risk. A balanced portfolio will have a small number of penny stocks and the like, but only after you've gained sufficient experience. I've traded for about a year now and I still stay away from them. The odds of catching a Google, Microsoft, etc are way too low for me to feel comfortable with it.
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  • superspeedzsuperspeedz Acolyte
    edited July 2010
    Crazzyass wrote: »
    Great advice from everyone. They are quite right. There is huge potential for profit, but like with most cases of that there is also astronomically higher amounts of risk. A balanced portfolio will have a small number of penny stocks and the like, but only after you've gained sufficient experience. I've traded for about a year now and I still stay away from them. The odds of catching a Google, Microsoft, etc are way too low for me to feel comfortable with it.

    I caught a jayhawk and a nexmed :P
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  • DiacetylmorphineDiacetylmorphine Acolyte
    edited July 2010
    Penny stocks are often just bait and switch operations, often with fake names, assets, profits, press releases etc, when investors discover the bullshittery it becomes worthless and everybody that rushed to make a quick buck is now out of all their money.
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  • Dumpster SlutDumpster Slut Acolyte
    edited July 2010
    penny stocks are a crap-chute in my opinion... maybe if your an investing wizard you can make money in it - but its not for the average joe
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  • AnonymousAnonymous Regular
    edited July 2010
    On a completely unrelated Pennystock note... What happened to that one investor that advocated Pennystocks that raged on webcam when people started to troll his chat?

    Seriously, I forgot who he was so if any of you know...

    Also, PennyStocks aren't profitable, they're the bastard brother of actual stocks.
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  • CrazzyassCrazzyass Regular
    edited July 2010
    superspeedz wrote: »
    I caught a jayhawk and a nexmed :P

    You lucky bastard :mad:
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  • JustAnotherAssholeJustAnotherAsshole Regular
    edited September 2010
    ashenblood wrote: »
    Are they profitable? Theoretically, one could make much more money, because it is possible to buy huge numbers of stocks. Even small increases in price result is massive gains. However, I've heard that they are also extremely risky, and most will go out of business in a matter of days. What's your perspective on the risk vs. potential reward?

    If you want to make lots of money on something with small returns, you'd have to invest a lot of money.
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  • i<3Shroomsi<3Shrooms Acolyte
    edited October 2010
    JustAnotherAsshole wrote: »
    If you want to make lots of money on something with small returns, you'd have to invest a lot of money.
    Not really, but if you don't do your research, you may as well be gamblin'... ;)
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  • mmaxxlleemmaxxllee Semo-Regulars
    edited November 2010
    The term penny stock refers to any stock that is traded outside one of the major exchanges. The definition of a penny stock is a low priced speculative security. From www.hototc.com you can know more extra things about penny stocks.
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  • mandingomandingo Regular
    edited February 2011
    the problem with Penny stocks is the shares outstanding. Typically Penny stock companies have a boatload of stocks that depress the stock price. Stock splits further decrease the value of penny stocks.

    However there are needles in the haystack and if you find one place heavy bets don't short change it because you will be kicking yourself.

    Example

    Look at the Charts of thompson creek metals (TC) it traded at 2 dollars for a while its not penny it still meets the definition of a penny stock.
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  • JustAnotherAssholeJustAnotherAsshole Regular
    edited February 2011
    DirtySanchez wrote: »
    Walmart shares started as a penny stock:p

    What's with the sig?

    You a Juche-Communist now?
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