| are many good penny stock investments available, | | | | someone guarantees certain performance out of a |
| which could turn a small amount of capital into a small | | | | stock, they may be a promoter, naive investor, |
| fortune very quickly. However, to discover these you | | | | self-serving broker, or have heard the guarantee |
| need to know what to look for and what to avoid. | | | | from another source. In any case, don't believe them. |
| When searching for that one big payoff, steer clear | | | | Instead check into the company yourself and if you |
| of the following examples. | | | | feel it is a good investment, you may want to |
| The Phone Salesman - Anyone who is attempting to | | | | proceed. |
| sell you investments over the phone should be | | | | Sinking Ships - When a stock has dropped a lot you |
| considered an enemy. They have high-pressure sales | | | | may think that, "it can’t go any lower," or |
| tactics, and effective, believable arguments. | | | | that it is "a good bargain." Especially with penny |
| However, they are not doing you any favors, no | | | | stocks, you need to avoid this type of thinking |
| matter how good they make an investment sound. | | | | because many sinking ships don’t ever |
| They are operating in their best interest to dump | | | | rebound, and they can go lower, and they |
| over-the-counter stock on you, and the money you | | | | aren’t good bargains just because they cost |
| pay in will go into their own pockets, or the pockets | | | | less than before. |
| of their company. | | | | Commission Free - If you are interested in getting |
| There has never been a need for good companies | | | | stock commission free you may think you are saving |
| that are going places to resort to these type of | | | | money, but it generally means that you are buying |
| tactics, but there has always been a need for poor, | | | | over the counter stock directly from a promoter or |
| sinking, or shady companies to do so. If you choose | | | | the company. |
| to ignore this advice you deserve what happens to | | | | Either way, they take their own invisible |
| your investment. | | | | ‘commission’ from you, either by |
| You may also run into difficulty trying to find a buyer | | | | selling to you for an arbitrary amount which is unfairly |
| for your shares once you decide it is time to sell. | | | | high, or selling to you for the asking price rather than |
| Very Low Volume Stocks - Without much trading | | | | the bid price based on their own current valuations. |
| activity it becomes increasingly difficult to buy or sell | | | | International Penny Stock - We’re not talking |
| for the prices you want. As well, it becomes nearly | | | | about living in the U.S. and steering clear of Canadian |
| impossible to get an understanding of where the | | | | stock, or vice versa. We are talking about penny |
| stock price is heading, or to calculate fair valuations | | | | stock issues from Africa, Australia, European, Russian, |
| for the company’s stock price. | | | | or South American penny stock markets. First of all, |
| Not only that, but companies subject to low trading | | | | you won’t be too impressed with the level of |
| volume generally do not have a lot of positive | | | | investor protection and exchange honesty in some of |
| interest. | | | | these regions, and you most certainly won’t |
| The Hot Tip Stock - There are actually professional | | | | be too impressed with the broker fees you incur |
| promoters who make a very good living generating | | | | when trying to purchase internationally. |
| and nurturing rumors about some penny stock | | | | Besides, if you can’t find good penny stock |
| that’s guaranteed to go through the roof. | | | | investments in North America, you won’t be |
| The entire concept hinges on the rumor being spread | | | | able to find them anywhere else either. |
| from person to person, at the office, over the | | | | Warrants and Rights - These are not technically |
| phone, or at social venues. | | | | stocks, but instead are derivative investments based |
| The promotional ploys can be very costly for | | | | on an underlying company's shares. However, they |
| investors who get involved without special | | | | often appear like penny stocks because they |
| knowledge about the company or the actions of the | | | | sometimes get listed in the stock pages, and often |
| promoter. In most cases if a stock really is going | | | | trade for pennies. |
| through the roof you won’t hear a word | | | | It is unlikely that you will accidentally purchase |
| about it, because a select few individuals will be very | | | | derivatives, but make sure you know what you are |
| intent on keeping the information to themselves. | | | | trying to buy by understanding the listing criteria of |
| Guaranteed Performance - If a stock is guaranteed | | | | the paper you are reading, or verifying your purchase |
| to go up, it will almost always go down. Nothing is | | | | with your broker. |
| ever certain, especially on the stock market. When | | | | |