| A diversified investment portfolio maximizes returns | | | | over $4.00 - that's a 3900% return. However, as a |
| while minimizing risks. A strategy worth considering is | | | | general rule, you must not invest money that you |
| to buy penny stocks to add to your portfolio to | | | | cannot afford to lose in the stock market, ever. |
| introduce a component of high risk, high reward to | | | | Certainly, my experience could have gone the other |
| balance out your low risk, low return investments. | | | | way for example, from $4.00 to $0.10, and that |
| What are penny stocks? There are varied definitions | | | | would have been a -3900% loss. Such is the volatile |
| but they are basically common shares that trade for | | | | nature of this investment vehicle living up to its claim |
| less than $5 per share. They are also referred to as | | | | of "high risk, high reward." |
| "micro cap stocks." These securities are listed on the | | | | To increase your chances of picking good penny |
| NASDAQ Small Cap, AMEX, Pink Sheets or | | | | stocks, you need to do proper research and analysis |
| over-the-counter-bulletin-board (OTCBB). Like regular | | | | on the companies that interest you. With these micro |
| stocks that trade on the main NASDAQ exchange, | | | | cap stocks in particular, you need to find ones that |
| there are good penny stocks and there are also bad | | | | have high daily trading volumes because holding |
| ones. As an investor, you know that due diligence is | | | | something that you cannot buy or sell quickly is |
| required before investing in any type of securities. | | | | worthless. |
| Why should you contemplate investing in micro cap | | | | Whether investing in these risky but lucrative shares |
| stocks? While it is true that penny shares are highly | | | | is right for you depends on your risk tolerance. So |
| speculative securities, individuals have made money | | | | are you comfortable pursuing penny stock fortunes |
| trading penny stocks. As a personal example, I had | | | | or would you prefer the security of government |
| bought an oil penny share for $0.10 and saw it rise to | | | | bonds? |