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Last Post: 6/28/2017 10:28:32 AM - Followers: 239 - Board type: Free - Posts Today: 1

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Penny Stock Investing
The Nature of Penny Stocks

For anyone new to investing in penny stocks, you should first be made aware of the differences between these micro-cap stocks and the more conventional blue-chip and mid-cap investments. Unlike buying shares in a large, stable company like Ford or IBM, you are dealing with speculative investments.

Penny stocks literally trade for pennies per share, or for as much as a couple of dollars. The beauty of penny stocks, of course, is that sometimes they 'grow up' and become mid-cap stocks, multiplying in value hundreds of times over and making many people very wealthy.

With penny stocks, also called micro-caps or juniors, you will see much greater price volatility, and thus greater and quicker gains and losses in asset values. It is precisely this volatility which draws investors to the junior markets, as one good pick could make you hundreds of times what you could ever make on the larger markets.

Of course, there is more risk than buying bonds, blue chips or defensive stocks - but this added risk is tempered with the possibility of making the big gains.

Most penny stocks, but not all, are resource or technology companies who initially sold shares in an effort to raise money for exploration or product development programs. Many of the companies have large debt loads and are not necessarily making more money than they are losing.

However, it is the potential of a major, or even minor success in their quest that often incites dramatic price climbs, and this is where their value lies.

Profit Potential

Modern Strategies Inc. has been in the business of researching penny stocks for many years, and has become effective at uncovering the best small cap investment opportunities and the most rewarding profit situations in the penny stock markets.

There are several ways to profit from penny stock investments. Modern Strategies Inc. has uncovered the most highly rewarding investment situations.

Promotional Stocks - These issues may or may not have much actual value. Promoters generate interest in these type of stocks in an attempt to drive share prices higher. The promoters own great amounts of shares and so they make more money the higher the share price travels. Eventually, they sell their holdings into the promotion and generate great personal profit. Then they move on to the next project, leaving the original stock and all its investors behind. Without the work of the promoter, the promotional issue soon comes crashing down.

These are the type of stock investor hear horror stories about, because many people often lose a good deal of money when they are naive about promotional ploys. However, getting in on a promotional stock early in its life cycle, and keeping an eye on the actions of the promoter can be very, very rewarding. It's like having a full time stock promoter doing everything in his power to get the share prices of the stocks you own to go through the roof, and investors who get in early can go along for the ride!

Technical Precursors - Often technical analysis can reveal patterns in the trading cycles of penny stocks. Sometimes these patterns illustrate excellent buying opportunities, where the underlying stock has a high probability of moving up strongly, and only a low probability of declining in value.

In addition, there are sometimes situations where several positive technical indicators combine at once to reveal that an issue is very likely to increase strongly in price over a short time frame, indicating that the particular issue is has excellent investment potential.

Fundamental Strength - Fundamentals involve such criteria as earnings, debt load, assets, and many others. It was long thought that earnings were the major driving force behind share prices, but Modern Strategies Inc. has since disproved this theory as it applies to penny stock companies. Instead, uncovering the best medium to long term investment opportunities must be done through exhaustive analysis of company financial statements. Investors should get involved with the companies that are making the most money, have the most effective management, and have improving trends in all factors of their operations. As well, industry comparisons and the examination of key financial ratios present clues as to which companies are destined for higher share prices.

Proper fundamental analysis of penny stock companies will generally reveal that there are about 2 or 3 superior investment opportunities out of every 100 companies examined. These 2 or 3 excellent corporations often represent better investments than 90% of stocks on the large-cap markets like the NYSE.

Undervalued Situations - Sometimes companies see their share price slide dramatically. There are occasions where this decrease in price has very little to do with the underlying fundamentals, and more to do with factors such as overall market weakness, interest rate increases, or others.

Opportunity exists in such situations because the shares are often 'unfairly valued' and a return to more realistic prices is inevitable. There are often cases where companies have more cash on hand per share than their share price, or have price to earnings ratios as low as 5.0. Although there is much more to uncovering the best undervalued situations, this is the basis behind the concept.

Minimized Downside - Often the combination of technical analysis and undervalued situations can reveal penny stock companies that have tremendous upside potential, and have a very low probability of declining in value to any significant degree.

These type of investments are excellent choices for penny stock investors that are less risk adverse.

Special Notes About Penny Stock Companies

Penny stock companies change their names more commonly than other publicly traded companies, and are also subject to more stock-swaps and consolidations. In any of these events, your shares in your account will be automatically replaced with the appropriate stock by your broker and notice will be delivered to you.

For example, if you owned 5000 shares of EXO and for every 5 shares you were to receive 2 shares of LOR, you would find your account holdings re-adjusted to reflect 2000 LOR which can be traded as normal. You will no longer have the 5000 EXO.

On rare occasions, a penny stock company can become delisted. This means that the shares will no longer trade on the exchange, and if the company does not get listed on another exchange or re-instated at a future date, you may be subject to a loss of capital equal to 100% of the total investment. However, this is a very rare occurrence, and there are simple ways to protect yourself against it which are periodically discussed in Modern Strategies Inc. publications. Delisting generally becomes a greater concern for investors who intend to use a long-term (several years) buy and hold strategy with penny stocks.


#14967  Sticky Note Come and Join Us!!! PENNYBUSTER 03/18/17 11:06:49 AM
#14458  Sticky Note $APHD Board Mail Alert .009 To .465 Today!! PENNYBUSTER 05/16/16 03:18:58 PM
#13457  Sticky Note Our Board Email Members Reaped The Rewards Of PENNYBUSTER 06/21/15 03:01:35 PM
#12372  Sticky Note I would like to invite you to our PENNYBUSTER 11/26/14 08:52:44 AM
#15278   $PGLC / T.PGLC The company also recently Cabroncita 06/28/17 10:28:31 AM
#15277   $SSOF WATCH FOR A POWER HOUR PUSH Robertscott 06/27/17 03:09:59 PM
#15276   SPARTA's revolutionary platform works on all Apple and Robertscott 06/27/17 02:52:03 PM
#15275   $PGLC / $T.PGLC Speaking in an interview with Cabroncita 06/27/17 01:47:09 PM
#15274   $GMERD Updated Technical Analysis Robertscott 06/26/17 03:41:10 PM
#15273   $PGLC the Chief executive and executive chairman of budfoxhub 06/26/17 03:25:11 PM
#15272   $GOSY green close coming now budfoxhub 06/26/17 03:06:38 PM
#15271   $PGLC / $T.PGLC The pre-tax net present value Cabroncita 06/26/17 01:54:09 PM
#15270   $SSOF stock is heading for current status, should budfoxhub 06/26/17 01:17:05 PM
#15269   $SRCO Anthony Havens, CEO of Sparta Commercial Services, Robertscott 06/26/17 10:25:09 AM
#15268   $GMERD on PST - Robertscott 06/26/17 09:41:04 AM
#15267   That still aint bad, im qeued in for ChrisTianSurfer 06/26/17 09:08:43 AM
#15266   iMobileApp's platform will let you easily manage your Cabroncita 06/25/17 03:43:01 PM
#15265   if i remember right it was around 5 million. PENNYBUSTER 06/25/17 10:29:54 AM
#15264   How many shares were made available? ChrisTianSurfer 06/25/17 10:23:51 AM
#15263   $SSOF on PST - Robertscott 06/23/17 02:32:33 PM
#15262   pulled my ppb bid. another seller showed up PENNYBUSTER 06/23/17 01:40:28 PM
#15261   $GRWC Trader's Cheat Sheet Robertscott 06/23/17 11:02:19 AM
#15260   $PGLC / $T.PGLC The PFS highlights the benefits Cabroncita 06/23/17 09:39:45 AM
#15259   Ya, i have 1m @2 on both ChrisTianSurfer 06/22/17 04:54:56 PM
#15258   no nothing on either. bid is dropping on PENNYBUSTER 06/22/17 04:40:55 PM
#15257   Notta.. u get any pp**? ChrisTianSurfer 06/22/17 04:37:38 PM
#15256   Through Sparta's subsidiary, iMobile Solutions, is a leader Cabroncita 06/22/17 08:34:04 AM
#15255   Yes We Do :) PENNYBUSTER 06/21/17 05:58:14 PM
#15254   We live to fight another day :) ChrisTianSurfer 06/21/17 04:57:14 PM
#15253   it looks like no fills for me either. PENNYBUSTER 06/21/17 03:04:39 PM
#15252   Must be nice lol.. thought i caught a ChrisTianSurfer 06/21/17 02:40:09 PM
#15251   i have a few bids in and working PENNYBUSTER 06/21/17 12:51:26 PM
#15250   Bidding pp** ir** VRED and mtpr.. ChrisTianSurfer 06/21/17 11:12:56 AM
#15249   $SNDY on radar, 009 up now, won't take budfoxhub 06/21/17 10:05:17 AM
#15248   $UAPC .0007 x .0008 Getting Volume. No Position PENNYBUSTER 06/21/17 10:01:24 AM
#15247   $NXXGF Look at the talented management team at Cabroncita 06/21/17 08:57:28 AM
#15246   $GMERD Quote on OTC Markets - Robertscott 06/21/17 08:44:11 AM
#15245   Ok, once we get in, we can work ChrisTianSurfer 06/20/17 11:23:26 PM
#15244   IR is the biggest 10 bag potential that PENNYBUSTER 06/20/17 11:07:00 PM
#15243   I like IR** bro, the other is skull ChrisTianSurfer 06/20/17 10:17:39 PM
#15242   Hopefully we can both get a decent position PENNYBUSTER 06/20/17 08:36:10 PM
#15241   Will bid 2s tomorrow.. if i get that ChrisTianSurfer 06/20/17 08:10:40 PM
#15240   small position 450k at 2 PENNYBUSTER 06/20/17 08:06:25 PM
#15239   Ppb* is in my wheelhouse.. u in? ChrisTianSurfer 06/20/17 08:04:51 PM
#15238   ICLD !!!!!!GIVE THEM A LOOK...MO GREAT COMPANY GOING Pellinator 06/20/17 05:58:30 PM
#15237   4 Sure PENNYBUSTER 06/20/17 05:57:28 PM
#15236   Gotta have patience in this game.. ChrisTianSurfer 06/20/17 05:50:36 PM
#15235   Me 2. Hopefully We Catch An Impatient One PENNYBUSTER 06/20/17 02:40:03 PM
#15234   Bidding 2s ChrisTianSurfer 06/20/17 02:03:39 PM
#15232   Bidding VRED 1s.. if i dont get em ChrisTianSurfer 06/20/17 01:46:44 PM
#15231   $PGLC / $T.PGLC "We needed to make a Cabroncita 06/20/17 01:42:21 PM
#15230   Nice Trade :) PENNYBUSTER 06/20/17 01:25:48 PM
#15229   $TWOH Performance Evaluation Robertscott 06/20/17 12:26:50 PM
#15228   $TWOH oversold, ready to bounce, nice support here budfoxhub 06/20/17 12:08:25 PM