Is Penny Stock Investing High Risk?
The first question you need to ask yourself is 'to invest or not to invest' in penny stocks, but this is for the most part a personal decision that mirrors if you like taking risks, however if you've the ability as well as the attitude to take greater risks, you should be pondering on penny stock investing. So if your monetary position is not very strong, and you have little spare money to save, it is better that you keep off these types of shares altogether and look at established stocks only. Similarly, even if you have a lot of surplus cash but are usually reluctant to take risks, it is advisable that you do not save in penny stocks. Then if you are the sort of soul, who enjoys taking chances in order to increase your returns, and don't mind losing some if it comes to it, then you might take a look at penny stocks.
Once you decide to commit in penny stocks, you ought to take care to ensure your investment has a reasonable chance of presenting you good returns. For this purpose, you ought to consider a number of things, for instance the repute of the business and its backers, past history if any is available, and also evaluate the fundamentals. Fund Managers and accountants often employ the phrase 'fundamentals' which pertains to the basic monetary value of a company. The prices cited in the share market are the consequence of numerous factors such as market sentiment. The fundamental principles of the company on the other hand will show you what the company is genuinely valued at but this comprises of understanding the proper monetary value in terms of the assets and the income of the business. Provided you save in a company with good basic principles, the chances of your forfeiting will be hugely reduced so use the techniques of evaluating shares for this function.
One additional golden rule that is applicable to all shares, but especially true in the case of penny stocks is the old adage, 'Don't put all your eggs in one basket', but this is pertinent even if you have privileged information. Inside information relates to private data that you own about a business that is liable to affect its share worth in the short run to a big extent. For example, if you knew that company A is in all likelihood to be taken over by a major combine volunteering a high value to the present shareholders, and if this is not yet acknowledged by the masses, you have inside information. You have information that makes you somewhat sure that the stock value will increase in the market considerably once this information becomes acknowledged. Under these circumstances it's ordinarily safe to act on exclusive information, assuming naturally, that it is reliable and true. Nevertheless, even in such cases you should prevent revealing yourself, especially in the instance of penny stocks. Plans simply fail to materialize, for example, in which case you might be left owning stock that has very little worth.
The next fundamental thing to keep in mind while considering penny stocks is that you might not be in a position to trade them quickly, particularly if you have a large number. So, if short-term liquidity is a concern for you, you should stay away from investing in penny stocks as it is much easier to sell stocks and shares that are traded on a regular stock market and ones that are well-known and frequently traded.
To finish, don't forget that penny stocks carry greater risks and less liquidity, so prevent over exposure and invest only after investigating. If you observe these conventions, you are careful, and lucky, you could make a healthy gain from penny stock investing. - 23212
Once you decide to commit in penny stocks, you ought to take care to ensure your investment has a reasonable chance of presenting you good returns. For this purpose, you ought to consider a number of things, for instance the repute of the business and its backers, past history if any is available, and also evaluate the fundamentals. Fund Managers and accountants often employ the phrase 'fundamentals' which pertains to the basic monetary value of a company. The prices cited in the share market are the consequence of numerous factors such as market sentiment. The fundamental principles of the company on the other hand will show you what the company is genuinely valued at but this comprises of understanding the proper monetary value in terms of the assets and the income of the business. Provided you save in a company with good basic principles, the chances of your forfeiting will be hugely reduced so use the techniques of evaluating shares for this function.
One additional golden rule that is applicable to all shares, but especially true in the case of penny stocks is the old adage, 'Don't put all your eggs in one basket', but this is pertinent even if you have privileged information. Inside information relates to private data that you own about a business that is liable to affect its share worth in the short run to a big extent. For example, if you knew that company A is in all likelihood to be taken over by a major combine volunteering a high value to the present shareholders, and if this is not yet acknowledged by the masses, you have inside information. You have information that makes you somewhat sure that the stock value will increase in the market considerably once this information becomes acknowledged. Under these circumstances it's ordinarily safe to act on exclusive information, assuming naturally, that it is reliable and true. Nevertheless, even in such cases you should prevent revealing yourself, especially in the instance of penny stocks. Plans simply fail to materialize, for example, in which case you might be left owning stock that has very little worth.
The next fundamental thing to keep in mind while considering penny stocks is that you might not be in a position to trade them quickly, particularly if you have a large number. So, if short-term liquidity is a concern for you, you should stay away from investing in penny stocks as it is much easier to sell stocks and shares that are traded on a regular stock market and ones that are well-known and frequently traded.
To finish, don't forget that penny stocks carry greater risks and less liquidity, so prevent over exposure and invest only after investigating. If you observe these conventions, you are careful, and lucky, you could make a healthy gain from penny stock investing. - 23212
About the Author:
Want to find out more about penny stock investing, then visit Harold Barnett's site on how to Invest Money and learn more about penny stocks and other investment vehicles.
posted by X - Men @ 9:45 AM
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