Penny Stocks - Good? If So, Any Hot Tips?

[NoMoreApathy]

I don't have a whole hell of a lot of money to invest, but I'm not a stupid person and I should be MAKING money from what I know about our economic future instead of having to worry about it.

Does anyone have any hot tips on penny stocks right now, and are they a good place to be? To start out trading right now, which I have just about 0 experience in, I can maybe allot $1000. It seems to me that I can do better with the cheaper stocks right now as I learn what I'm doing.

Advice here would be much appreciated.

 

[Corydoras]

Whoa, whoa, whoa... Don't do penny stocks. They are very volatile and with a sudden downdraft you can be left with nothing. And most penny stocks go to near nothing anyway.

Actually, a beginner should choose a boring blue chip and watch it fluctuate a little bit day to day over the months or years to see how stocks move, so that you can start watching stocks that are a bit more volatile.

Learn what the beta coefficient is, and compare it for different stocks, like blue chips (usually lower) and new technology stocks (usually higher) etc. etc.. Wikipedia has an entry on the beta coefficient, but right now Wikipedia is not working for me.

Trading a lot is expensive. Say you buy 10 shares at $20 with a $10 commission for the trade. Then you sell at $30 with a $10 commission. Fact is, your commission has taken up 20% of your profit! That's why the stereotypical advice is buy quality and hold.

 

[Truth Warrior]

Do most folks make money investing in penny stocks? The correct answer to that question, also answers your original question.

 

[jaybone]

High risk, and very high potential reward.
First thing to know about pennies, or any company with very small market cap is that they can be influenced heavily by one trader through 'pump and dump' schemes.
If you get a hot tip from an anonymous poster on a message board, RUN.
IF you find a company that you think has potential, and have done your own research, then by all means play a little, but as soon as you hit the 'buy' button you should consider all of your money GONE, because 9 times out of 10 you will lose most of what you put in, that other 1 out of ten can easily be up thousands of percentage points.

 

[Zippyjuan]

"Penny stocks" have very low prices for a reason- not a lot of people expect the companies to make a profit. The price number of a stock does not mean that it is a value. Even bigger stocks are taking hits these days- and penny stocks get hit more. I would go with something safer. You want not only a return on your investment, but also a return OF you investment.
Information on penny stocks in general: http://www.investopedia.com/articles/03/050803.asp

I suggest you take a little time and learn more about choosing and investing in stocks. A good places to start:
http://www.fool.com/school/basics/basics.htm?source=ifltnvpnv0000001

 

[OptionsTrader]

If you assume they are all scams, you will be right 99% of the time.

Penny stocks are for suckers.

Don't be a sucker.

Anyone that tells you otherwise has something to sell, and it's probably their POS scam pennystock.

 

[tmosley]

Yeah, you'd be better off buying silver and holding for a while. Even if there was no depression, silver is becoming scarce as it is used up by industry, so it will pay to have it a few years from now no matter what the circumstances.

 

[seapilot]

yes a good one that came up Monday is Bear Stearns, going for 2 dollars a share. Better off buying pre-1982 copper pennies and double your intrisic value of your money instantly.

 

[NoMoreApathy]

yes a good one that came up Monday is Bear Stearns, going for 2 dollars a share.

Yeah, I asked about it yesterday when it was at 4.50ish and OptionsTrader told me don't. I value his advice, although earlier this morning it was at 7.50 ish. I would have dumped $1000 into it and took a chance and watched it like a hawk. I could have made a quick $600.

I'm not mad though OT. It went right back down, and i probably could have gone to take a shit and missed the high completely.

EDIT: correction, it's high today was actually 8.50. So profit would have been more like $800 - commission. Damn, that does kind of suck.

 

[AceNZ]

Yeah, I asked about it yesterday when it was at 4.50ish and OptionsTrader told me don't. I value his advice, although earlier this morning it was at 7.50 ish. I would have dumped $1000 into it and took a chance and watched it like a hawk. I could have made a quick $600.

I'm not mad though OT. It went right back down, and i probably could have gone to take a shit and missed the high completely.

EDIT: correction, it's high today was actually 8.50. So profit would have been more like $800 - commission. Damn, that does kind of suck.

What you're describing is not trading -- it's gambling.

 

[AceNZ]

I don't have a whole hell of a lot of money to invest, but I'm not a stupid person and I should be MAKING money from what I know about our economic future instead of having to worry about it.

Does anyone have any hot tips on penny stocks right now, and are they a good place to be? To start out trading right now, which I have just about 0 experience in, I can maybe allot $1000. It seems to me that I can do better with the cheaper stocks right now as I learn what I'm doing.

Advice here would be much appreciated.

The price of the stocks you invest in, taken by themselves, should have precisely zero impact on your investment choices.

One of the first things you need to figure out is what your motivations here really are. Are you in it for the adrenaline? For a quick buck? Do you aspire to be a day trader? Or a short-term trader? Or a long-term value-oriented investor? Each path has its pros and cons, and each has a special set of skills.

With zero experience and close to zero capital, day trading or short-term trading in this market is a sure path to ruin. The waters are full of sharks, and they will eat you alive.

 

[OptionsTrader]

Why don't you read what I wrote.

yes it could go up a bit, no doubt. But in my opinion, the move will be short lived because unless something changes with regards to the JPM acquisition, this stock is going to asymptotically approach $2 soon. The only reason it is not there yet is because millions of shares were sold short previously and they needed to cover to lock in their gains. If you do not undersand what that means, what the short sellers did from $170 to now was open transactions by selling short the BSC stock - they essentially borrowed shares from others, opened a transaction with a sale, and waited until the stock went to shit. That time is now, and the "demand" for shares today was people buying those borrowed shares back, a lot of them. There was a daytrading opp today, buying in the upper 2s and selling to short sellers covering in the 5s. But that is risky bidness and not for the novice. My advice would be to stay the hell away from this stock.

BSC stock is a game of hot potato and the potato isn't a potato it is plutonium.

I liken it to selling life rafts on the Titanic; it might be hella profitable for a little while, but if you stick around too long you are &*&^ed.

And if you have to come on a forum and ask for advice about flipping the most volatile stock on the market, the day it is moving, what kind of advice would it be to say BUY BUY BUY like cramer, when I know the stock isn't going to stay up very long at all because the price action is short covering and the price is doomed to approach $2?

The fact that you are now asking about penny stocks only solidifies the fact that you should not be day trading.

 

[OptionsTrader]

Novastar financial was over $150 per share in 2006.

After the mortgage crisis had begun showing its ugly head in Feb/Mar of 2007, Novastar dropped from $70 and settled around the $30s.

A buying opportunity you would say, right?

WRONG

Buying $10,000 of Novastar at $30 would be worth $500 today, for a 95% loss.

I literally recommended to a freind to not make that trade and he did it anyway because he perceived $30 was so much lower than $150 that it just had to go up, it just had to.

You MUST know what you are buying. A "low price" does not mean "cheap"!!!

NOVS is now delisted and on the pinksheets. Last trade $1.56, and no it still isn't a buy.

 

[NoMoreApathy]

Why don't you read what I wrote.

yes it could go up a bit, no doubt. But in my opinion, the move will be short lived because unless something changes with regards to the JPM acquisition, this stock is going to asymptotically approach $2 soon. The only reason it is not there yet is because millions of shares were sold short previously and they needed to cover to lock in their gains. If you do not undersand what that means, what the short sellers did from $170 to now was open transactions by selling short the BSC stock - they essentially borrowed shares from others, opened a transaction with a sale, and waited until the stock went to shit. That time is now, and the "demand" for shares today was people buying those borrowed shares back, a lot of them. There was a daytrading opp today, buying in the upper 2s and selling to short sellers covering in the 5s. But that is risky bidness and not for the novice. My advice would be to stay the hell away from this stock.

BSC stock is a game of hot potato and the potato isn't a potato it is plutonium.

I liken it to selling life rafts on the Titanic; it might be hella profitable for a little while, but if you stick around too long you are &*&^ed.

And if you have to come on a forum and ask for advice about flipping the most volatile stock on the market, the day it is moving, what kind of advice would it be to say BUY BUY BUY like cramer, when I know the stock isn't going to stay up very long at all because the price action is short covering and the price is doomed to approach $2?

The fact that you are now asking about penny stocks only solidifies the fact that you should not be day trading.

I thought the sarcastic tone in my posts was apparent, but I guess not. I come here asking for tips, because I would trust a Ron Paul supporter for market/financial information over anyone else at this point. It in no way means I will literally act on that advice and blow my load one any one particular stock. I have a general idea on what companies I think will prosper in the coming months and longer, but that doesn't stop me from still asking.

I asked about penny stocks for no other reason than to get exactly the answers I've gotten. To hear fellow RP supporters tell me NO, is good enough for me. You didn't see me argue my case FOR buying them, did you? I merely asked, and that is all.

I hope that others reading these threads get just as much out of it as I do.

And to AceNZ, as far as I'm concerned, putting money into the stock market is gambling. Considering you have no idea on any particular day what might happen to ANY company in ANY way, any money you might have invested in a company is being gambled.

You guys are reading too far into my queries. If we shouldn't be asking these questions here, then what should we be doing? continually making thread after thread about gold and silver, and how bad the fed is? That gets tired after a while.

 

[tpreitzel]

NOVS is now delisted and on the pinksheets. Last trade $1.56, and no it still isn't a buy.

So, you're saying that fundamentals might play a role along with the technical data? I won't step in this mud pie any deeper so rightfully assume my question as a rhetorical one.

 

[AceNZ]

And to AceNZ, as far as I'm concerned, putting money into the stock market is gambling. Considering you have no idea on any particular day what might happen to ANY company in ANY way, any money you might have invested in a company is being gambled.

From your perspective, I can see why you would think that way. YOU have no idea what will happen to any company in any way. That's not true for everyone.

 

[NoMoreApathy]

From your perspective, I can see why you would think that way. YOU have no idea what will happen to any company in any way. That's not true for everyone.

No one knows what kinds of "acts of god" might cause a huge problem for ANYTHING you are putting your money into.

I realize I'm grasping at straws a bit, but there's a reality to what I'm saying.

I'm sure 9/11 caused a lot of people to lose a lot of money that they otherwise thought was pretty damn safe the day before. That's just one example.

 

[Zippyjuan]

I thought the sarcastic tone in my posts was apparent, but I guess not. I come here asking for tips, because I would trust a Ron Paul supporter for market/financial information over anyone else at this point. It in no way means I will literally act on that advice and blow my load one any one particular stock. I have a general idea on what companies I think will prosper in the coming months and longer, but that doesn't stop me from still asking.

I asked about penny stocks for no other reason than to get exactly the answers I've gotten. To hear fellow RP supporters tell me NO, is good enough for me. You didn't see me argue my case FOR buying them, did you? I merely asked, and that is all.

I hope that others reading these threads get just as much out of it as I do.

And to AceNZ, as far as I'm concerned, putting money into the stock market is gambling. Considering you have no idea on any particular day what might happen to ANY company in ANY way, any money you might have invested in a company is being gambled.

You guys are reading too far into my queries. If we shouldn't be asking these questions here, then what should we be doing? continually making thread after thread about gold and silver, and how bad the fed is? That gets tired after a while.

Yes, there are risks of investing in anything. There are also risks of not investing in anything (inflation). The stock market is very volitile right now and probably will continue to be so for a while due to the great uncertainty about how the economy is and will be doing. The key to stocks is to look at them long term if you do decide to invest. The market has its ups and downs but over the long term, that is up. While about 88% of the gains can be said to be atributable to inflation, that still leaves a long- term average gain of 12% in real terms. The key is to have a broad- base portfolio and be willing to ride out any corrections. One way is to not purchase individual stocks but instead look for low cost index funds which hold a wide variety of stocks. They are not glamorous but are the cheapest and most effficient way to invest. I have a couple of those myself. Index funds can be specialized- like say in energy or precious metals- or they can be more general like trying to match the S&P 500 or the Dow Jones Index or even a Total Stock Market index.

Expenses in investing are important- they reduce your returns. Look for funds with no load (fees to buy in or sell your shares) and low management fees (money the company charges members to take care of picking, buying, and selling). Watch for funds that have a high turnover ratio (how many times they sell an average stock in a year). The more they trade, the higher the transaction costs and possibly higher taxes for you on the capital gains the fund realizes- you pay those each year even if you don't sell your shares in the mutual fund).