Are Penny Stocks The Most Sensible Investment For You?
Stocks Penny stocks can make you lots of money. But they can also lose you a fortune. Have you got the belly to speculate in these small priced stocks? Consider these contributors.
Straight off what is a penny stock? The most generally accepted definition of a penny stock is a stock that constantly trades for less than $5 a share. While most penny stocks are associated with the OTC traded "Pink Sheet" instruments, penny stocks can be discovered on the NYSE and the NDX .
1. How far are you from retirement?
If you are less than ten years from retirement, then you shouldn't be making an investment in penny stocks. Penny stocks are rather more like a bet than an investment. And if you do make a decision to invest in a penny stock, it should be with cash that you don't need for retirement. Consider it your "Vegas money."
2. Do you not like volatility?
If you really do not like to watch the swings and roundabouts of the market, then a penny stock is not best for you. Some penny stocks can double and lose eighty percent of their worth in the same week. That's because penny stocks are the most hyped of all stocks on the market. A mention in a stock newsletter alone can make a penny stock double. That suggests that these stocks are moving without any real elemental motive.
3. Do you under stock financials?
If you don't understand p / e proportions or net profit versus gross profit, then you shouldn't be making an investment in penny stocks. That's because there are several penny stocks have extraordinarily infirm balance sheets. Unlike stocks in the DJX thirty or the SP 5 hundred, penny stocks are sometimes made of little firms with really murky fiscal reports. If you cannot know how a penny stock company makes cash, then you'll have much difficulty earning a return.
Article Source: FxTradingStock.com
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by: Ali Mohammad
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Date: Tue, 8 Mar 2011
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