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Last Post: 7/25/2014 11:21:36 AM - Followers: 205 - Board type: Free - Posts Today: 2

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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.





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PostSubject
#11686  Sticky Note Unusual Volume and Important News And Filings. Sign PENNYBUSTER 02/18/14 04:35:07 AM
#11496  Sticky Note Join Us On Our Facebook Group Page. PENNYBUSTER 10/04/13 11:36:06 PM
#11398  Sticky Note 2 Newsletters.. 2 Ways To Hit It Big.. PENNYBUSTER 08/08/13 04:35:03 PM
#9925  Sticky Note Twitter Account http://twitter.com/#!/PENNYBUSTER1 PENNYBUSTER 12/30/11 07:06:04 AM
#12129   RTXB Recent news! http://blogs.wsj.com/bankruptcy/2014/07/24/rtxb-to-focus-on-ca NYC Trader 07/25/14 11:21:36 AM
#12128   CEHC News $0.0017 Thinning out! buywhenhurt 07/25/14 10:27:18 AM
#12127   LIBE Historical Prices (yahoo.com): http://finance.yahoo.com/q/hp?s=LIBE+Histori NYC Trader 07/24/14 01:36:00 PM
#12126   $ELEV KaaaaaaaaaaaaaaaaaaaaBoooooooooooooooooooooMMMMM!!!!!!!!!! PENNYBUSTER 07/23/14 03:07:05 PM
#12125   $ELEV New 52 Week High .06 x .075 PENNYBUSTER 07/23/14 11:08:45 AM
#12124   $CHOB .03 Shares Outstanding 1,800,000 One For The PENNYBUSTER 07/22/14 03:28:55 PM
#12123   $ELEV Still Moving Now .05 On Bid. PENNYBUSTER 07/22/14 03:27:01 PM
#12122   RAYS New HOD at $0.0014, needs to break buywhenhurt 07/22/14 12:27:20 PM
#12121   FOFU Latest filings (otcmarkets.com): http://www.otcmarkets.com/stock/FOF NYC Trader 07/22/14 11:09:27 AM
#12120   $FOFU ~ NEW Website: http://www.cafeserendipity.net Fa$tlane 07/21/14 11:39:36 PM
#12119   $ELEV Shell Quietly On The Move .039 Today. PENNYBUSTER 07/21/14 08:34:19 PM
#12118   $SNDY .0007 President's Letter to Shareholders, PENNYBUSTER 07/21/14 06:31:46 PM
#12117   INCT Share structure NYC Trader 07/21/14 10:33:53 AM
#12116   $INCT ~ Jumping huge here >> Up 52% NYC Trader 07/21/14 09:49:21 AM
#12115   $INCT ~ The Operator of the drilling venture Fa$tlane 07/21/14 08:31:27 AM
#12114   ECDP Basic Tech. Analysis (yahoo.com): http://finance.yahoo.com/q/ta?s=ECDP+Basi NYC Trader 07/18/14 01:13:04 PM
#12113   ECDP Market Stream (nasdaq.com): http://www.nasdaq.com/symbol/ECDP/stream NYC Trader 07/18/14 10:47:45 AM
#12112   $AURT share structure NYC Trader 07/18/14 09:51:16 AM
#12111   $EVLI Bussinessweek (businessweek.com): http://investing.businessweek.com/resear NYC Trader 07/17/14 02:30:45 PM
#12110   LKEN Analyst Research (nasdaq.com): http://www.nasdaq.com/symbol/LKEN/analyst-re NYC Trader 07/17/14 01:47:46 PM
#12109   $FBCD ~ We fully expect our connection point NYC Trader 07/17/14 01:08:39 PM
#12108   EVDR New 52 Week High on big VOLUME buywhenhurt 07/17/14 12:28:47 PM
#12107   FBC Holding, Inc. (OTCPK: FBCD)-Let's see some more profit! jedijazz 07/17/14 07:35:35 AM
#12106   QLTS is interesting......Check board, chart floridaboy 07/17/14 06:42:21 AM
#12105   Radar > $FBCD Fbc Holding, Inc. (FBCD) Fa$tlane 07/16/14 11:56:41 PM
#12104   MPIX new HOD at $0.0023 breaking out with Volume. buywhenhurt 07/16/14 03:27:20 PM
#12103   $EVLI SEC Filing http://www.otcmarkets.com/stock/EVLI/filings jedijazz 07/16/14 02:56:17 PM
#12102   $ASUV ~ The demand for natural resources and Fa$tlane 07/16/14 12:29:59 PM
#12101   $BBRY announces new digital assistant for its Passport PENNYBUSTER 07/16/14 12:11:22 PM
#12100   $BBRY http://finance.yahoo.com/news/siri-google-now-cortana-hi-145911091.html … PENNYBUSTER 07/16/14 11:31:20 AM
#12099   $BBRY 10.22 One To Watch 4 Swing Traders. PENNYBUSTER 07/16/14 11:13:18 AM
#12098   EVPH Latest news (otcmarkets.com): http://www.otcmarkets.com/stock/EVPH/news - h NYC Trader 07/16/14 10:24:38 AM
#12097   EVPH Cheatsheet NYC Trader 07/16/14 09:39:53 AM
#12096   EVPH Very favorable Share Structure Undervalued NYC Trader 07/16/14 08:58:50 AM
#12095   $ASUV Twitter feeds on Seeking Alpha jedijazz 07/15/14 11:02:24 AM
#12094   Today is without question, a BIG day for jedijazz 07/15/14 10:51:43 AM
#12093   EVLI’s certainly on NEWS WATCH, love these jedijazz 07/15/14 10:16:54 AM
#12092   EVLI make sure it’s on your screen jedijazz 07/15/14 10:12:15 AM
#12091   NHLE seeking alpha article: http://seekingalpha.com/article/2310535-the-vapor-t jedijazz 07/15/14 10:08:06 AM
#12090   $DGRI ~ Website http://www.dutchgoldinc.com/ Fa$tlane 07/15/14 08:57:56 AM
#12089   UPPR Historical Prices: http://finance.yahoo.com/q/hp?s=UPPR+Historical+Prices NYC Trader 07/14/14 01:46:55 PM
#12088   CJTF Short Term Indicators Buy and Hold NYC Trader 07/14/14 12:41:42 PM
#12087   $UPPR - UPPR has moved aggressively to deliver NYC Trader 07/14/14 11:59:13 AM
#12086   Lexaria Corp (CSE:LXX) (OTCQB:LXRP) Chairman & CEO Chris jedijazz 07/14/14 11:50:24 AM
#12085   UPPR Updated Chart NYC Trader 07/14/14 11:40:35 AM
#12084   $ASUV ~ The demand for natural resources and Fa$tlane 07/14/14 11:27:37 AM
#12083   NHLE OTC Short Report: http://otcshortreport.com/index.php?index=NHLE NYC Trader 07/14/14 10:49:02 AM
#12082   $DGRI - opened green today, the current research jedijazz 07/14/14 10:23:59 AM
#12081   $DGRI -According to ArcView Market Research, the U.S. jedijazz 07/14/14 10:23:16 AM
#12080   $DGRI Financial Services - Credit Card Processing, Customer NYC Trader 07/14/14 10:21:52 AM
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