{"id":1110644,"date":"2019-04-12T19:16:55","date_gmt":"2019-04-12T19:16:55","guid":{"rendered":"https:\/\/juniorminingnews.com\/?p=1110644"},"modified":"2019-04-12T19:16:57","modified_gmt":"2019-04-12T19:16:57","slug":"penny-stocks-basics","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1110644","title":{"rendered":"Penny Stocks Basics"},"content":{"rendered":"
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HOLLY D. JOHNSON<\/a>@CLUBTHRIFTY<\/span><\/a><\/p>\n

FEBRUARY 11, 2019<\/span>\u00a0in\u00a0<\/span>INVESTING<\/a><\/p>\n<\/h5>\n<\/div>\n

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ShutterstockProfessional\/Shutterstock.com<\/span><\/figcaption><\/figure>\n<\/div>\n

It\u2019s easy to get sticker shock when you realize just how expensive\u00a0popular stocks<\/a>\u00a0have become. Investing in Amazon or Google\u2019s parent company, Alphabet, might cost you all your money to only buy\u00a0one<\/em>\u00a0share, after all. Not everyone has the means \u2014 or the nerve \u2014 to invest so much money into a single investment.<\/p>\n

What is a penny stock?<\/h2>\n

On the other end of the spectrum are\u00a0penny stocks<\/strong>, or stocks that trade for less than $5 a share. Most penny stocks actually cost less than $2 a share, but the rule isn\u2019t set in stone.<\/p>\n

Most companies that offer penny stocks are fairly new and haven\u2019t quite established themselves as a successful business. This makes them highly speculative for investors, which is obviously reflected in the cost for a share of their stock.<\/p>\n

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Also note that penny stocks don\u2019t\u00a0trade as much as other stocks<\/a>, nor do they normally trade on major market exchanges. Most companies that offer penny stock aren\u2019t transparent enough about their financials to exist on a major exchange, nor do they adhere to the strict requirements they employ.<\/p>\n

Can you make money with penny stocks?<\/h2>\n

According to Chris Ball, a financial advisor and the founder of Build Financial Muscle, you can absolutely make money with penny stocks. In fact, the potential for profit is really the main incentive that draws people in. Not only do penny stocks allow you to invest in companies that are poised for significant growth, but you can often by a large sum of shares for very little.<\/p>\n

Good penny stocks also tend to move up in price quickly, he says. For that reason, \u201cpeople who are willing to do homework on the companies and are not easily swayed by volatility can do well.\u201d<\/p>\n

The key to ending up ahead with penny stocks is the same rule that guides the investing world \u2014 buy low and sell high. For example, you could get in when shares are .10 cents each and they could rise to $2 apiece. Buying 500 shares will only cost you $50 and you\u2019d earn $1,000. Imagine what you could\u2019ve earned with 1,000 shares or more. But this only works out if a company actually performs well.<\/p>\n

Taking a chance on a penny stock is like playing a slot machine \u2014 you have a feeling you might win big without really knowing what it\u2019s capable of. If you know the market and company well, you might believe a certain penny stock is worthy of your money. If you can handle high-risk investments \u2014 and can stand to lose the cash if it doesn\u2019t work out \u2014 then penny stocks could work for you in the long run.<\/p>\n

\"\"<\/a>Stock Warrants<\/strong><\/a>
\nPower Point Presentation<\/a><\/strong>
\nApril 5, 2019<\/a><\/strong><\/p>\n

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Are penny stocks illegal?<\/h2>\n

Penny stocks aren\u2019t illegal in the slightest, although they are commonly used in a variety of financial scams. For example, many penny stocks get used for a \u201cpump and dump\u201d scheme, meaning a group of investors will artificially inflate the price only so they can sell their shares and walk away. Other companies that trade in penny stocks are predicated on false information and fraud to begin with.<\/p>\n

Also remember that penny stocks let you invest into companies without a proven track record. As such, you may never see your money again.<\/p>\n

Companies that trade in penny stocks aren\u2019t on major market exchanges, don\u2019t bring in a lot of profit, and have limited operations and resources. It\u2019s hard to know if a company will succeed if you don\u2019t know enough about them to predict their success.<\/p>\n

The Security and Exchange Commission (SEC) usually regulates companies with more than $10 million in assets and more than 500 registered shareholders, so most penny stocks aren\u2019t required to file financial statements. This leaves stockholders (and potential stockholders) to invest blindly.<\/p>\n

As a result, the SEC considers penny stocks \u201cspeculative investments\u201d where buyers should know the full risks before ownership.<\/p>\n

\u201cInvestors in penny stocks should be prepared for the possibility that they may lose their whole investment,\u201d\u00a0the SEC says<\/a>. \u201cOr an amount in excess of their investment if they purchased penny stocks on margin.\u201d<\/p>\n

What to look for in penny stocks<\/h2>\n

When it comes to finding penny stocks to invest in, ample research will likely be the key to your success. If the goal of investing in penny stocks is buying stock in companies that are getting ready to become wildly profitable, then you need to know how to search for this information.<\/p>\n

While you may not love this advice, your best bet is keeping up with the financial stats and emerging news of companies that trade in penny stock. Believe it or not, you can find out a ton of financial information about small companies on websites like Yahoo Finance or Google Finance.<\/p>\n

For the most part, you\u2019ll want to search for the following types of companies:<\/p>\n