Comments on: The Beauty of Penny Stocks http://www.getrichslowly.org/blog/2006/12/27/the-beauty-of-penny-stocks/ personal finance that makes cents Sun, 22 Nov 2009 04:54:17 +0000 http://wordpress.org/?v=2.7.1 hourly 1 By: Bryce http://www.getrichslowly.org/blog/2006/12/27/the-beauty-of-penny-stocks/#comment-203434 Bryce Fri, 23 Oct 2009 21:43:59 +0000 http://www.getrichslowly.org/blog/2006/12/28/the-beauty-of-penny-stocks/#comment-203434 Oh. Well i guess i shouldnt have invested $50 and turned it into $730. maybe next time ill buy a single share of US STEEL and turn $50 into $60...................Genius you are William..... Oh. Well i guess i shouldnt have invested $50 and turned it into $730. maybe next time ill buy a single share of US STEEL and turn $50 into $60……………….Genius you are William…..

]]> By: Louis Shain http://www.getrichslowly.org/blog/2006/12/27/the-beauty-of-penny-stocks/#comment-168874 Louis Shain Thu, 26 Feb 2009 21:27:03 +0000 http://www.getrichslowly.org/blog/2006/12/28/the-beauty-of-penny-stocks/#comment-168874 Very informative blog. I don't necessarily believe all points though. I know that penny stocks are worthless, in fact, most of them are driven by news and hype and not the company itself. However, in knowing so, I've been able to receive returns investing in penny stocks far greater than i could in the NYSE. With penny's you just have to realize that none of them are investments. You must trade smart, get out and realize your gain as soon as you do, AND NEVER go back to that stock. For instance, this year thus far, I am up about 200%, verses the market being down thus far. Although I do believe almost everything you say about penny stocks, I am a firm believe that you can capitalize on quick trades if you don't treat them like investmenst. I normally check out www.surefirepennystocks.com for information among others, but that is a decent start. Very informative blog. I don’t necessarily believe all points though. I know that penny stocks are worthless, in fact, most of them are driven by news and hype and not the company itself.

However, in knowing so, I’ve been able to receive returns investing in penny stocks far greater than i could in the NYSE.

With penny’s you just have to realize that none of them are investments. You must trade smart, get out and realize your gain as soon as you do, AND NEVER go back to that stock.

For instance, this year thus far, I am up about 200%, verses the market being down thus far.

Although I do believe almost everything you say about penny stocks, I am a firm believe that you can capitalize on quick trades if you don’t treat them like investmenst.

I normally check out http://www.surefirepennystocks.com for information among others, but that is a decent start.

]]> By: Mr.Magoo http://www.getrichslowly.org/blog/2006/12/27/the-beauty-of-penny-stocks/#comment-114200 Mr.Magoo Sun, 27 Jan 2008 10:19:18 +0000 http://www.getrichslowly.org/blog/2006/12/28/the-beauty-of-penny-stocks/#comment-114200 Well Sheepeople, your intelegence once again shines brightly! LOL. It doesn't matter what the price is because what are you going to do when the dollar falls flat on it's face. If any of you had an ounce of smarts you would buy precious metals. Then you can Laugh all the way to the Bank. GET OUT OF STOCKS ALL TOGETHER!!! Well Sheepeople, your intelegence once again shines brightly! LOL. It doesn’t matter what the price is because what are you going to do when the dollar falls flat on it’s face. If any of you had an ounce of smarts you would buy precious metals. Then you can Laugh all the way to the Bank. GET OUT OF STOCKS ALL TOGETHER!!!

]]> By: Brian http://www.getrichslowly.org/blog/2006/12/27/the-beauty-of-penny-stocks/#comment-85546 Brian Tue, 08 May 2007 10:23:20 +0000 http://www.getrichslowly.org/blog/2006/12/28/the-beauty-of-penny-stocks/#comment-85546 Indeed a penny stock is a gamble and those that buy them should know that. If you prefer a little immediate gratification during your gamble go to a casino. If on the other hand you are trying to invest stay away from the .ob's and get in a solid mutual fund or a blue chip stock. Indeed a penny stock is a gamble and those that buy them should know that. If you prefer a little immediate gratification during your gamble go to a casino.

If on the other hand you are trying to invest stay away from the .ob’s and get in a solid mutual fund or a blue chip stock.

]]> By: Lau's Personal Finance Blog http://www.getrichslowly.org/blog/2006/12/27/the-beauty-of-penny-stocks/#comment-39115 Lau's Personal Finance Blog Thu, 04 Jan 2007 21:10:15 +0000 http://www.getrichslowly.org/blog/2006/12/28/the-beauty-of-penny-stocks/#comment-39115 <strong>Bought mutual funds and REIT...</strong> Here's a little advice for you starting to invest in the stock market thinking you're going to get rich of of of these Penny Stock (you know, those ending with an .OB or .PK): YOU WON'T!!! If you're going to learn from experience, please learn fro... Bought mutual funds and REIT…

Here’s a little advice for you starting to invest in the stock market thinking you’re going to get rich of of of these Penny Stock (you know, those ending with an .OB or .PK): YOU WON’T!!! If you’re going to learn from experience, please learn fro…

]]> By: Anon http://www.getrichslowly.org/blog/2006/12/27/the-beauty-of-penny-stocks/#comment-36307 Anon Sat, 30 Dec 2006 05:05:43 +0000 http://www.getrichslowly.org/blog/2006/12/28/the-beauty-of-penny-stocks/#comment-36307 <i>The efficient market hypothesis states that the stock price generally reflects all available knowledge about that security. In other words, a $2.00 stock is worth $2.00 to most people — no more, no less. If there were solid data or a concrete reason for the stock to be valued at a higher price, it would already be at that price. It is incorrect to think that you are getting a bargain when you purchase a penny stock. If you purchase a penny stock, you are gambling — you are not investing.</i> Nothing you've said here has depended on the stock being a $2.00 stock. Why not just say, "If you purchase a stock, you are gambling — you are not investing." The efficient market hypothesis states that the stock price generally reflects all available knowledge about that security. In other words, a $2.00 stock is worth $2.00 to most people — no more, no less.

If there were solid data or a concrete reason for the stock to be valued at a higher price, it would already be at that price. It is incorrect to think that you are getting a bargain when you purchase a penny stock. If you purchase a penny stock, you are gambling — you are not investing.

Nothing you’ve said here has depended on the stock being a $2.00 stock. Why not just say, “If you purchase a stock, you are gambling — you are not investing.”

]]> By: William Wallets http://www.getrichslowly.org/blog/2006/12/27/the-beauty-of-penny-stocks/#comment-35692 William Wallets Thu, 28 Dec 2006 21:16:05 +0000 http://www.getrichslowly.org/blog/2006/12/28/the-beauty-of-penny-stocks/#comment-35692 Hey guys, thanks for all the comments. I wanted to clarify some points, because I definitely agree with a lot of the comments. I actually was just trying to be a bit too clever by making the blanket statement that there is NEVER a reason to buy penny stocks. I should have worded it less strongly. In other words, I think it is very very rare in which there is an instance where one should buy a penny stock. In general, I am a believer in the weak-form of the efficient market hypothesis. In other words, I do think that fundamental analysis (Buffet and Graham) can beat the market, but some keen insight is needed. I was gearing this article towards novice investors, in an attempt to highlight how difficult it is to accurately value companies that are very new and/or that have a very small market capitalization. Hope this helps and I hope you enjoyed the article. Hey guys, thanks for all the comments. I wanted to clarify some points, because I definitely agree with a lot of the comments.

I actually was just trying to be a bit too clever by making the blanket statement that there is NEVER a reason to buy penny stocks. I should have worded it less strongly. In other words, I think it is very very rare in which there is an instance where one should buy a penny stock.

In general, I am a believer in the weak-form of the efficient market hypothesis. In other words, I do think that fundamental analysis (Buffet and Graham) can beat the market, but some keen insight is needed. I was gearing this article towards novice investors, in an attempt to highlight how difficult it is to accurately value companies that are very new and/or that have a very small market capitalization.

Hope this helps and I hope you enjoyed the article.

]]> By: Matt http://www.getrichslowly.org/blog/2006/12/27/the-beauty-of-penny-stocks/#comment-35684 Matt Thu, 28 Dec 2006 20:45:38 +0000 http://www.getrichslowly.org/blog/2006/12/28/the-beauty-of-penny-stocks/#comment-35684 Devotees of Warren Buffett argue that he and Benjamin Graham have fairly well disproven the "efficient market" theory, and there's definitely some substance to that. Buffett wouldn't disagree with the general statement about penny stocks, though. Devotees of Warren Buffett argue that he and Benjamin Graham have fairly well disproven the “efficient market” theory, and there’s definitely some substance to that. Buffett wouldn’t disagree with the general statement about penny stocks, though.

]]> By: Joel http://www.getrichslowly.org/blog/2006/12/27/the-beauty-of-penny-stocks/#comment-35649 Joel Thu, 28 Dec 2006 17:36:21 +0000 http://www.getrichslowly.org/blog/2006/12/28/the-beauty-of-penny-stocks/#comment-35649 The poster sez: "The efficient market hypothesis states that the stock price generally reflects all available knowledge about that security. In other words, a $2.00 stock is worth $2.00 to most people — no more, no less." The thing I've heard along these lines is that people who buy stock are generally subscribing to the "greater fool theory" in which they buy in the hopes of selling the stock for more money to a "greater fool". The wisdom we are to glean from this is that stocks are worth what they cost, period. But, to the stock-buying public, this is manifestly untrue. Why else would we invest in anything if not to hope one day to sell it to a greater fool? The poster sez: “The efficient market hypothesis states that the stock price generally reflects all available knowledge about that security. In other words, a $2.00 stock is worth $2.00 to most people — no more, no less.”
The thing I’ve heard along these lines is that people who buy stock are generally subscribing to the “greater fool theory” in which they buy in the hopes of selling the stock for more money to a “greater fool”. The wisdom we are to glean from this is that stocks are worth what they cost, period. But, to the stock-buying public, this is manifestly untrue. Why else would we invest in anything if not to hope one day to sell it to a greater fool?

]]> By: Jobu http://www.getrichslowly.org/blog/2006/12/27/the-beauty-of-penny-stocks/#comment-35508 Jobu Thu, 28 Dec 2006 03:50:59 +0000 http://www.getrichslowly.org/blog/2006/12/28/the-beauty-of-penny-stocks/#comment-35508 Nice article, I like it. I think that the 95% statistic is probably true when you take into account all the mega-tiny business that are started up and then abandoned very soon thereafter. I would assume the number is smaller, but still on the order of 60%+ for companies that get listed. I do like the part about gambling for better odds... Hidden gems are out there, but they're very difficult to find. I do think it's a gamble. Nice article, I like it.

I think that the 95% statistic is probably true when you take into account all the mega-tiny business that are started up and then abandoned very soon thereafter. I would assume the number is smaller, but still on the order of 60%+ for companies that get listed.

I do like the part about gambling for better odds… Hidden gems are out there, but they’re very difficult to find. I do think it’s a gamble.

]]> By: Joe http://www.getrichslowly.org/blog/2006/12/27/the-beauty-of-penny-stocks/#comment-35471 Joe Thu, 28 Dec 2006 02:40:49 +0000 http://www.getrichslowly.org/blog/2006/12/28/the-beauty-of-penny-stocks/#comment-35471 Research is the key, of course. You should never buy something you don't understand. Research is the key, of course. You should never buy something you don’t understand.

]]> By: Steve http://www.getrichslowly.org/blog/2006/12/27/the-beauty-of-penny-stocks/#comment-35470 Steve Thu, 28 Dec 2006 02:38:08 +0000 http://www.getrichslowly.org/blog/2006/12/28/the-beauty-of-penny-stocks/#comment-35470 "Over 95% of businesses fail before the completion of their first year of operations. " I'd like to see a source for this. “Over 95% of businesses fail before the completion of their first year of operations. ”

I’d like to see a source for this.

]]> By: MoneyMan http://www.getrichslowly.org/blog/2006/12/27/the-beauty-of-penny-stocks/#comment-35378 MoneyMan Wed, 27 Dec 2006 21:42:51 +0000 http://www.getrichslowly.org/blog/2006/12/28/the-beauty-of-penny-stocks/#comment-35378 That's a great point that not many people understand- it is possible for a $2 stock to be wildly expensive, and a $500 stock to be cheap. I wouldn't go as far as saying that buying a penny stock is gambling in all cases. In some cases, you might have located an undervalued gem. If you do your research and kick the tires, you might find yourself a great penny stock. It's highly unlikely, but it's not impossible. That’s a great point that not many people understand- it is possible for a $2 stock to be wildly expensive, and a $500 stock to be cheap.

I wouldn’t go as far as saying that buying a penny stock is gambling in all cases. In some cases, you might have located an undervalued gem. If you do your research and kick the tires, you might find yourself a great penny stock.

It’s highly unlikely, but it’s not impossible.

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