Before analyzing what a penny share is and is it worth the pennies that we invest in it, we must realize one thing -“Nothing is ever cheap in this world and that the cheapest may prove to be the costliest in the end”
What is a penny share? A share that is far below its par value first of all, can be a penny share. So, if it is a share that has a pound as its face value then obviously penny stock becomes its literal meaning.
It is the age old maxim that there are two things that always govern the stock market-one is greed and the other is fear. “I would like to see my money double in the shortest possible time; I would like to get rich as quickly as possible.” These are the two things that are uppermost in a person when he even contemplates looking at these penny stocks in a big way.
Is life that easy? These penny stocks are a lure to the most ambitious [I have euphemistically used this word instead of using the term ‘greedy’] people in the market. Once again it would be more apt to call them speculators than investors, because investors go into the market with the idea of getting some steady returns. They are hence wary of their choice and think twice about the erosion of capital.
As I had written earlier, nothing is ever cheap in the world .If there is a penny stock in the market then why is it so? This is what we need to think very hard .There may be the rare ones that have fallen on bad times and there is a reversal of fortune, there may be a potential take over, there may be a turn around and the stock is being revived and given new life,–this where our wishful thinking leads us– but how many of us are able to get this privileged authentic information before it has already marched more than sixty percent from its starting point?
Whether we need to take the risk further and convince ourselves that it is after all still within the penny range and so the money invested may not be much, depends on the individual.
If you are a person who would feel guilty to lose money on account of greed, do not take the chance
.If you are a person who has borrowed money [which is fundamentally the biggest folly one can ever commit in the stock market] never take this chance
If you have a commitment to keep and you hope to fulfill it by taking this big chance then you ought not to do it because these penny stocks are the most difficult to get rid of in times of a downturn. We need no better downturns in the markets than what we have been witnessing so far.
If you are a new entrant to the stock market never do this. It is likely to be your greatest temptation because you would tend to be elated over the small amount needed for your initial investment. Close your eyes and run a mile away from the penny stock if you would like to last in the market It is also a common saying that there is a beginner’s luck that favors the new entrants. Do not forget that it may end there.
Another thing that we ought to remember is, in times of a revival in the market these penny stocks also are the favorite parcel that many players dump on the gullible man’s hands.
There may be a handful of turn around stocks but be sure that you can always get them, they need not be penny stocks but you can definitely pick them at their reasonable low prices. When the company is performing and is giving decent returns and there is growth assured, the risk element reduces; life is long and if you are going to miss one opportunity or two of multiplying your money manifold it really does not matter; you can still invest in the stock.
It would finally prove easier losing money than gaining it by investing in these penny stocks. The unwanted baby may be sitting in your own hands and you would be unable to get rid of it. The disgust caused by the scrap paper in your hand far outweighs the possible high returns awarded by the stock. Be safe than sorry. You can be very sure that in times of a dip in the market it is these penny stocks that are the most pathetic ones that lovingly cling to the lower circuit everyday.
I agree that it gives the greatest thrill when we have stumbled upon a hitherto undiscovered opportunity, and there is a huge boost to our ego when we luckily happen to make some good money in such stocks .But this is fit for the high net worth seasoned individual who has his profits fighting in the market and for whom one loss can easily be compensated by the umpteen gains in other counters. It can also be for the decently affluent upper middle class seasoned investor who has his initial capital out of the market and has only profits in the market and who can afford to take this high risk for high returns. Even then the amount allocated for this should be the lowest percentage of a portfolio.
So what is the worth of a penny share?-that of a raffle ticket, a ticket for a lucky draw!!!!!!!!!!!
I have been in the market for more than twenty years and let me assure you that the negligible number of times I invested in these penny stocks and the woeful tales I have heard from many people have only reinforced my belief that the cheapest may prove to be the costliest and this would demand a heavy price-by way of your peace of mind.
Aside from investing in stocks, you should diversify your investment. You can choose in immobilien investieren as your instrumnent. This is known to be very effective in delivering return or profit. Real estate is always a good choice of investment.
Money does not come that easily, and sensible investing is much more rewarding than adventurous investing. Opportunities cannot be more adventurous than those offered by these penny stocks.