subject: Discover How You Can Make Money Investing in Penny Stocks! [print this page] Discover How You Can Make Money Investing in Penny Stocks!
Penny stocks are company share offerings made to share investors by companies that are too new or small to be offered with the major share exchanges. Lots of investors are attracted to these stocks as they can require only a small initial investment, however it's important to keep in mind that there sometimes there is a high risk of the share value falling to zero. People are attracted to these types of stocks due to the fact that despite the risks you can see great payoffs.Selecting penny shares correctly means that you should have an unbiased overview of the organization's business model. Just like purchasing other stocks, you are going to need to understand the type of business they are taking part in and what company plans they have in the upcoming years.It is uncommon that the businesses that issue these kinds of stocks have hard to understand organizations - typically they are easy to understand and research. One common type of penny stock is a resource business that benefits when the price of the resource it extracts goes above a certain price. There are also some oil exploration stocks that are valued in the same way.Penny stocks are believed to be a high risk investment, according to the Securities and Exchange Commission. Unfortunately there's always the risk that the organization won't make it even with enough research.It's important to know that the reporting regulations for penny stocks aren't typically as rigid as stocks on national stock exchanges. One of the kinds of penny shares is referred to as a "pink sheet" and has almost no regulation in regards to to their reporting and financial accounting standards.Since there's low or even no regulation or standards, this renders this type of share susceptible to fraud and market manipulation. People posing as independent observers will use their influence to run up penny share prices, then they'll sell and delist the share. This is the classic con known as a "pump and dump".However, even with that said it doesn't necessarily mean you should never invest in these shares entirely. There are lots of real, sound start up companies, and they have tons of potential. Tons of organizations that are looked to as penny shares are destined to be successful in the future. Individuals who can pick a valuable penny stock will get a large payoff.Always keep in mind that choosing the right penny share will make you a sizeable payout. Even if you post a loss on the majority of your penny stock picks, the single winner will give you such a big gain that you'll forget all about the picks that didn't return a gain.
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