Penny Wise, Profit Ensured

You would have often come across the argument that penny stocks aren’t worth investing in because of their high risk potential. While the part about the high risk may be true, the part about them not being worth investing in is absolutely false. Regardless of their nature or quality, stocks will always be risky ventures. Growth stocks just happen to carry some additional risks (and benefits) as well. The best thing about these stocks is that the returns are high. If you are investing now and your timing (and luck) is right then chances are that you’ll make huge profits (upto 300%). Otherwise, you’ll either be stuck with the shares or you’ll have lost your money. We have stated this at the outset not to scare you but to inform you that these stocks are very volatile and that the risks, as well as the returns, are very high.

Moving on, let’s answer the most obvious question first - Where is all the gold buried? Well, your best bet would be to invest in the small and upcoming (and promising) companies listed in the pink sheet or the OTCBB. These are companies with market capitalizations of around 50 million to 300 million USD and these will not be listed on the major exchanges (which is why they are listed here in the first place). These can be (however) on their way to making it big. So if you invest money in a promising microcap company, chances are that it may get listed in a bigger exchange someday and yield you great returns.

Never ever blindly invest in a microcap company. The one big downside to microcap trading is the fact that you will always find more misinformation and rumors than actual data. As it is not mandatory for pink sheets to disclose their information, you will have a very hard time discerning the good from the bad and the bad from the ugly. However, this need not be a reason to avoid penny shares. A diligent investment backed by solid research will yield excellent results.

Microcap stocks are often subjected to pump and dump tactics. Typically, a buyer with a lot of cash would purchase a large volume of a particular stock for some price and then launches a misinformation campaign about it. The hype created about the stock (through electronic media) will push its prices up as more and more people try to buy its shares. During this time, the investor sells all his shares at a high price and thus makes a huge profit. These often turn out to be profitable to the investor and disastrous to those who purchased the stock during the pump period.

Here are some tips which will are worth remembering when you invest in penny stocks:

*Invest in stocks which are involved in market insulated sectors such as healthcare.

*Research the company’s background and credentials thoroughly before you invest.

*Never fall prey to hasty trading.

*Invest in delisted ones which may bounce back or in promising upstarts.

*Initially invest small sums in penny shares to get an idea of how the setup works.

*Subscribe to penny stock alerts and learn to discern the meaningful ones from propaganda.

In the penny stock market, information is power. The difference between making a huge profit and going broke depends on making informed decisions. This is where the OTC Reporter can help you. You can find the site online and sign up for its newsletter. It gives credible and timely information on the stock scenario and is a very useful tool. It is presented to you in a simple, easy to read format and gives you very useful information ranging from the gains made on the previous day to live data and reports on various stocks. If you are new to such stock scene, it is recommended that you explore the OTC Reporter’s site thoroughly before you make an investment. You can be assured that your investment will be worth every penny!