Penny Stock Investments

Some people, often those that do not have enough money to invest in the more common stocks and shares, opt to invest in what are known as penny stocks. So what are penny stocks and why can people with small amount s of money invest in them? Basically penny stocks are shares in smaller companies, companies whose total value means that shares in them are only usually worth a few pennies as opposed to the dollars that the blue chip companies can ask for their shares. These smaller companies from time to time also need to raise capital and so they offer shares but can’t ask so much for them as their total value is often less than $50 million. Just like the large shares though, these penny stocks can fluctuate in value and so that is how investors can make or lose money by buying and selling them. Some people have referred to penny stock investing as more of a gamble than an investment and the reason why they say this is because they are shares just the same as shares in large companies, as the penny stocks do not appear in the large stock markets like the NASDAQ and NYSE, they do not come under the jurisdiction of the SEC (Securities and Exchange Commission) which means that they are not necessarily required to divulge a certain amount of information on themselves so investors can know the company they are investing in. Without not necessarily knowing about a company you are investing in, you are perhaps making a blind investment or what some people call a gamble. This may be true but that has not stopped some people from making a killing by trading in penny stocks as some have become what are known as penny stock millionaires. However not all traders in penny stocks do so well as figures show that only 10% of penny stock traders actually make a profit with 90% of traders losing their investments. It is possible though that a penny stock investor makes some investments in a small company which later grows to become a large corporation and if that happens, the investors share prices will of course go up considerably. As the share prices of these small companies do only cost a few pennies as opposed to several dollars, it means that you can start investing in penny stocks with as little as perhaps $50 and hopefully grow you amount from that. As the penny stocks do not appear in the larger more well-known stock markets, you will have to know how to invest in them but the easiest way to do so is to find a stock broker that deals in penny stocks as they will have all the answers and can make the investments on your behalf. Not all stock brokers deal in penny shares but there are some that do and so all you need to do is look around and find an appropriate one for your requirements.

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