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Penny Stocks are Hot! Beware

Dec 29, 2007
Penny stocks are no joke if you are looking for a way to make money and make it fast. I suppose you have pondered the idea of investing in these a time or two or perhaps you have heard of them but really did not know what they were.

Well here is the secret, penny stocks can bring in the big bucks BUT you can also lose your shirt if you do not know what you are doing. Settle down and does some research before you get too excited. Take it from someone who has gotten burned more than a couple times that you need to understand what you are getting into before jumping in blindly.

So what is a penny stock exactly? Well, officially it is any stock with shares currently priced under $5. Unofficially it is anything well under a dollar. Everyone has their own ideas of what a penny stock is but the general consensus is it is something with shares priced in the penny range. Makes sense right.

What is the earning potential with these stocks? Tremendous is the short answers but these stocks can never be mentioned without mentioning the inherent risk associated with such stocks. They can be really great but also really dangerous.

We are not talking about normal stocks here. We are talking about stocks that have the potential to return hundreds of thousands of percentages in one day. That does not always happen but it does happen often.

So what is the safest way o invest in these types of stocks. Ooh, good question. There is no perfect answer but I will give you AN answer. Before promotions or on a steady incline. I say before promotions because penny stocks are sensitive by nature and respond very quickly to any kind of advertisement or promotion. If you can find out when a stock will be promoted and then get in on it before it is promoted then you are golden.

If a penny stock is experiencing a steady incline then it is probably on its way to not being a penny stock anymore and making people tons of money. This happens all the time with companies who are in high demand or highly promoted industries.

There is certainly money to be made in penny stocks. The best advice would be to track several companies and watch any kind of news releases related to those companies. Good news means profits for you if you get in early.
About the Author
Scott Johns conducts research and analysis of stock market picks for a penny stock analysis company. To check out some of his company's latest picks go to Best Penny Stocks
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