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What You Need to Know About Penny Stocks

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By : Chris Johansen    19 or more times read
Submitted 2013-03-18 02:14:01
Most investors shy away from penny stocks, and most of the time, with good reason. Penny stocks are hard to research, exceptionally volatile, and can drain an account in a matter of minutes with a bad down turn. For those investors who like a little more risk and the possibility of an even bigger reward, investing in penny stocks can be the key to their financial security. Fining legitimate penny stocks, however, can be difficult, and many investors are left wondering where they can find new penny stocks.

The first place to look is the NASDQ exchange. These penny stocks tend to be less risky and are subjected to more rigorous filing and listing standards. Many of these stocks belonging to new companies as part of their initial public offering, and the stock prices can be bought for less than $5.00 a share. Other companies listed on the NASDQs micro lode board may have been good performers before the recession. While their stock value has dropped significantly, analysts and investors feel like these stocks could make a big comeback. NASDQ penny stocks can be bought as part of a longer-term investment strategy.

Another place to look for penny stocks are the pink sheet and the over the counter bulletin board (OTC-BB). These penny stocks are traded between individuals, using a phone or online trading platform. Companies trading OTC-BB have usually been delisted from a major stock exchange. This happens when a company is facing bankruptcy or other financial issues. These companies, although de-listed are still required to maintain SEC filings. Other companies may be trading on the OTC-BB in order to test the waters on the value of their. Investors should pay attention to what analysts think and say about these companies, since they may be a long term money maker. These companies are less risky bets than companies who list on the pink sheets.

Companies listed on the pink sheets are not required to list or file with the SEC. This lack of documentation about earnings, debt, equity, and sales makes investing in them a big risk. These companies may be too small to be listed on a major exchange or the over the counter bulletin board, or they prefer not to undergo the regulatory scrutiny of the Securities and Exchange Commission. Either way, these companies are volatile and risky investments. The best way to identify pink sheet penny stocks is to subscribe to a website or service that identifies and tracks these stocks. Most of these sites are free, and they provide a daily listing of available stocks and recent movement in price.

Finding and investing in new penny stocks can be challenging. Investors should look for unbiased and comprehensive research and trust their own intuition and common sense when tracking their stock. Financial advisors recommend a diversified portfolio, and this is equally, if not more true of penny stock portfolios. When looking at a list of new penny stocks, be sure to investigate companies in many different industries. This diversification will help protect you against the inevitable ups and downs.

Are you looking for more information regarding penny stocks? Visit today for more information!

Are you looking for more information regarding penny stocks? Visit today for more information!
Author Resource:- Are you looking for more information regarding penny stocks? Visit today for more information!
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