Jan 21, 2012

Posted by in Penny Stock | 0 Comments

Should You Buy Cheap Penny Stocks?

So many investors today are taking a closer look at cheap penny stocks and are wondering if these are something they want to invest in. Some stocks of major corporations are priced at the cost of several hundred dollars per share, and this can make it difficult for those who are really looking for a way to make a significant amount of money with a limited investment in the stock market difficult. Before you make the decision to buy these cheaper stocks yourself, you do first want to know what they are all about.

What Are Cheap Penny Stocks?

First and foremost, you will want to know exactly what cheap penny stocks are. These are stocks in publicly traded companies that are priced below $1. In many cases, they trade for just a few cents on the dollar. In many cases, these are new or unestablished companies, and so there is some risk involved in purchasing such stocks. However, they do offer investors with limited cash to invest with the opportunity to buy literally thousands of shares for just a few dollars in many cases.

Other Risks Associated with Cheap Penny Stocks

As you can imagine, if you buy thousands of shares of cheap penny stocks at a price of just a few cents per share and the price of that stock then rises above $1 or better yet above $5, you have made a great return on your investment indeed and with little risk to you financially. Yet the fact is that many people have been known to try to artificially inflate the price of these very inexpensive stocks in order to generate their own profit from an increase in price. So often you will find that there is a great deal of price fluctuation associated with these stocks, and that creates risk.

You can buy several hundred shares of such stocks for just a few dollars in many cases, and so most people do find that any risk associated with these investments is truly minimal. If you are like so many other investors today, you will make the great decision to invest in cheap penny stocks and you will likely enjoy some great returns from many of these stock picks.

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