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Thursday, July 16, 2009

Are Penny Stocks Too Risky?

By Marco Davies

We all know the term 'high-risk investment' often sounds frightening, and frequently this set phrase alone is enough to put a good many savers off - because at the end of the day no one wants to take a chance. The difficulty with obtaining any sort of stock (high-risk or not) is that it's invariably a risk.

In that respect is a lot of data swimming around on the World Wide Web regarding penny stocks. Virtually everyone with e-mail has gotten spam at some point, boasting about them as the next fantastic investment. Regrettably, much of this data is geared toward victimizing you in some sort or another, and it is likely that you will lose all of the money that you placed into the stocks and shares promoted in this way. This doesn't necessarily follow that all penny stocks are raw trades, or that every single investment is a con, in fact, far from it as some may be very profitable.

Penny stocks are reasonably valued shares in companies or commercial enterprises that are thought of "small," as opposed to big corporations. Fortunately, there aren't large numbers of share owner engaged, making them less "liquid" than many other kinds of stock. The goal of speculating in penny stocks it to spend only a tiny amount of money in the beginning to enjoy a big return afterwards, but does it happen as easily as this? It does, now and again, just not regularly but for people who are aware what they are doing when they speculate, they can be a fantastic investment tool. Mastering the art of dealing in penny stocks can be delicate, however.

Basically, penny stocks don't trade on the major stock exchanges, rather, they are acknowledged as "over the counter" investments, listed on Pink Sheets and the OTCBB. This makes them rather extraordinary, and somewhat more difficult to locate for a good many speculators. Penny shares also do not trade very frequently, so now and again investors have very little time to act. Because trading doesn't occur often, there is always the fear of being not able to trade one's stocks and landing up with a poor investment funds. This is just all part of the challenge of dealing in penny stocks, and numerous speculators consider this makes the game all the more intriguing. When you invest, you should get monthly updates that inform you of how your stock is managing.

Some people consider penny stocks too risky but the only person who can determine that is you. It's all a question of how much gambling with your funds you desire to do, just how much you are aware penny stocks, and how fortunate you feel. If you believe investing your money in penny stocks is a respectable idea, then it probably is but everybody has a different view so study them, and create your own views. - 23196

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