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Read This Before You Purchase Penny Stocks


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Purchase Penny Stocks

Should You Purchase Penny Stocks?

Would it make sense for you to purchase penny stocks? Even the most vocal proponent of this form of trading must admit that it is not for everyone. It can be very profitable but you have to have the kind of personality that can handle the difficulties of this business. There are risks just as there are benefits involved in this type of investment.

The Risks and Benefits When You Purchase Penny Stocks

• When you buy stocks on the regular stock exchanges, you are under the protection of the SEC. This agency requires companies to file certain pieces of data in order to acquire spots on the list of stocks available. They have to provide information about their financial situations, which investors use to determine the real value of the companies.

When you purchase penny stocks, you have no such protection. These companies have not filed with the SEC. In fact, it can be nearly impossible to find out much more than a name and a price about some of these stocks. You take much bigger risks when you purchase penny stocks.

• The good news is that more risks mean more potential profits. The low price of these stocks scares off some investors; however, shrewd traders know that low share values can increase earnings exponentially. After you purchase penny stocks, their value can only descend so much before they hit zero. You can think of zero value as a kind of cushion here. On the other hand, the sky is the limit when it comes to increases in the values of these stocks. Purchase penny stocks and watch how they can double or triple in value in the blink of an eye.

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