A Penny for Your Stocks

According to Investopedia Inc. the penny stock market has seen phenomenal growth this past decade. From '94 to '03, the Over-the-Counter Bulletin Board trading volume increased an astounding 8900%, equaling a total of 63% of the NASDAQ and 78& of the NYSE share volumes. Many an investor has succumbed to their siren song.

It isn't hard to see why. Penny stocks are usually traded in lots of 1,000 and, as the name suggests, are bought (and sold) at incredibly low prices. There is no official price cut-off, and differences of opinion range from shares trading under $1.00 all the way up to $5.00. Others distinguish according to the market that they are traded on (the OTCBB, OTC or "Pink Sheets" for example). Yet others designate stocks as penny stocks based upon their market capitalization, or the value of each stock multiplied by the total number of outstanding shares. Regardless of the specifics, a general rule applies to all penny stocks ? they are a very high risk investment. Inversely, there's also the potential for staggering rewards.

But for every pot of gold at the end of the rainbow, there are thousands of cliffs and pitfalls along the way. The risks and dangers of penny stocks are many. In the stock exchange, there is a "best price" priority given to orders of a higher price than yours if you're buying or a lower price if you're selling. Combining this priority with what is very often low volume trading means there will be times when you find that your orders cannot be filled. In addition, there will be instances where you will have to settle for partial order fulfillment. And these are just dangers faced when your stock is performing well.

Penny stocks come from companies that are often less than credible, and unlike some of their more expensive cousins, can find themselves swayed by the power of rumors. Press releases, news stories, widespread whispers and even online forums and chat-rooms can be responsible for dramatically influencing their performance. This volatility creates two considerable challenges: 1) a high potential for schemes and scam artists; and 2) the inability to use traditional stock charting methods with any real effectiveness. It goes without saying that this isn't a market for the faint of heart.

Jennifer Gibbs is a successful freelance writer who lives in South Georgia with her husband and son. Be sure to check out her website for more great content, or to request a bid for your writing needs. http://www.JenniferGibbs.com

In The News:


Investor's Business Daily

Why Mutual Fund Managers Are Betting On Tech, 'Quality' Stocks
Investor's Business Daily
The end-of-summer blahs and elevated geopolitical uncertainty took their toll on the stock market and stock mutual funds in August, which notched their first loss of the year. XAutoplay: On | OffAfter having fallen nearly 2% around mid-August, the ...


Investor's Business Daily

Hodges Mutual Fund Aims For Elite Status With Bets On Leading Stocks Like Emergent BioSolutions
Investor's Business Daily
Hodges Small Intrinsic Value Fund (HDSVX) is off to a good start, thanks to its three-heads-are-better-than-one management style and an appetite for leading stocks such Emergent BioSolutions (EBS), Consolidated Tomoka (CTO), Westwood Holdings (WHG) ...
Emergent Biosolutions, Inc. - EBS - Stock Price Today - ZacksZacks Investment Research
Havey Adam - SEC.govSEC.gov
EBS | Stocks Latest Headlines for Emergent Biosolutions - BarchartBarchart

all 51 news articles »

CNBC

Fund managers really love the big-name tech stocks, but hate the rest of the sector apparently
CNBC
The researchers looked at nearly 7,000 equity strategies from investors like mutual funds and pension funds. The five most heavily weighted stocks were Alphabet, Apple, Amazon, Facebook and Microsoft. No surprises there. But the average weight of tech ...


Yahoo Finance

4 Top Mutual Funds to Buy for a 401 (k) Plan
Yahoo Finance
Fidelity Balanced FBALX, with a Zacks Mutual Fund Rank #1, seeks income and capital growth consistent with reasonable risk. FBALX invests approximately 60% of assets in stocks and other equity securities and the remainder in bonds and other debt ...


3 Top-Ranked JP Morgan Mutual Funds to Add to Your Portfolio
Zacks.com
It has a legacy of investment management since 1865. Also, JPMorgan is the eighth-largest mutual fund firm in the U.S. and prides itself as the nation's leader in equity fund flows. JPMorgan offers managed accounts and retirement products. The company ...

and more »

3 Strong Buy USAA Mutual Funds to Boost Gains
Zacks.com
USAA Investment Management Company allocates its assets across a wide range of mutual fund categories including both equity and fixed-income funds. The company seeks to follow military values — Service, Loyalty, Honesty and Integrity — to offer ...

and more »

Investor's Business Daily

Texas Mutual Fund Managers Explain Hurricane Harvey's Impact On Texas Stocks
Investor's Business Daily
XAutoplay: On | OffEric Marshall and Derek Maupin, lead manager and a co-manager respectively of Texas-based Hodges Small Intrinsic Value Fund (HDSVX), talk about that impact on several Texas-based stocks they hold in IBD's upcoming monthly mutual ...

and more »

Investorplace.com

5 Tech Mutual Funds to Buy on Apple Inc.'s (AAPL) New iPhone Launch
Investorplace.com
On the 10th anniversary of iPhone, tech behemoth Apple Inc. (NASDAQ:AAPL) launched three new varieties of its iconic iPhone — iPhone 8, 8 Plus and the high-end iPhone X. Although shares of Apple stock declined following the launch of the new iPhone, ...

and more »

Investorplace.com

7 Stocks to Buy That Will Beat the Pros
Investorplace.com
At the height of the last bull market circa 2007, 65% of Americans were invested in the stock market, whether through individual stocks, mutual funds, ETFs, and 401ks and IRA's. Everyone, it seemed, had stocks to buy. 7 Stocks to Buy That Will Beat the ...


Business Insider

Wall Street is divided over the future of banks
Business Insider
Large-cap mutual fund portfolios carry a 141-basis-point overweight position in financial stocks, relative to their benchmark, making it the group's second-most bullish bet, according to data compiled by Goldman Sachs. At the same time, hedge funds ...

and more »
Google News

Why Technical Indicators

The fight continues to rage among traders who use technical... Read More

Successful Trading ? Establish Your Risk Level

Before you embark upon a journey of trading stocks or... Read More

Series 7 Exam

What is the Series 7 Exam? If you... Read More

Emotional Involvement

I'll bet with almost anyone that has stocks or mutual... Read More

A Common Misconception about Stock Prices

I cringe every time I hear a novice investor tell... Read More

The Stock Market Investor?s Worst Enemy

Every stock market investor faces one primal enemy. An enemy... Read More

Long-Term Investment In Todays Market?

The stock market is very unstable at this time going... Read More

Dividends

When is a dividend not a dividend?The latest thing "conservative"... Read More

Stock Market Diversification

In one of my previous articles (Investing in the stock... Read More

Peer Groups

Whenever I see mutual fund comparisons in the trade publications... Read More

What Does it Take to be a Stock Trader?

It takes a total mental commitment to the task. It... Read More

What Are You Waiting For?

Do you own any mutual funds? In an IRA or... Read More

The Exclusive Club of Large Caps

Picture one of those clubs where only the real heavyweights... Read More

The Secret Method to Selecting a Winning Trading System

Every successful trader has a winning system. There are of... Read More

The Cub; II

We keep hearing about this bear market and that the... Read More

How We Eluded The Bear Of 2000

The date October 13, 2000 will forever be embedded in... Read More

Again With the Bubbles?

A few years back ? it seems like an eternity... Read More

Risk Control

Everything you invest in has risk so you want to... Read More

Stock and Fund Dividends

When is a dividend not a dividend?The latest thing "conservative"... Read More

9 Deadly Trading Mistakes!

The following are a list of nine things you want... Read More

Dont Buy Worldcom! A Guide to Wise Bottom Fishing

Over the past few months, several investment professionals have brought... Read More

Lights of the Stock Market

There are red lights, green lights, blue lights and spot... Read More

Exchange Traded Funds Primer

Exchange Traded Funds (ETFs) are a group of passive index... Read More

Prosperity

It has fallen upon the consumer to make our economy... Read More

Long Term Investing

In his wonderful book, 'Multiple Streams of Income', best selling... Read More