Oct 11, 2011

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Do Oil Penny Stocks Offer Value And Security For An Investment?

Pros and Con to Oil Penny Stocks

Oil Penny StocksWhere do oil penny stocks come in when investors consider the appeal of high earning investments they have to consider the best ways to make a profit against safety for their capital? The traditionally safest forms of investment bank saving accounts and the housing market have been discredited by the recent fiscal difficulties. This has turned people towards alternative places for their finance such as the stock market or foreign exchange rates, however these are traditionally volatile investment vehicles and this is where the role of these stocks can come in.

The difference between oil penny stocks and regular stocks and shares is simply their size. The cheap nature of penny stocks means an investor can by a large amount of shares, as opposed to a limited number of more expensive stocks. The price of oil penny stocks has a number of affects on the behaviour and creates benefits and disadvantages.

Advantages to oil penny stocks

The major advantage can also be considered the biggest disadvantage. If an investor has large quantities of one stock that goes up or down their capital will grow or shrink accordingly. This can mean there are major profits available for the sensible investor, but anyone buying in this way must be cautious of movements in the wrong direction.

The second advantage of oil penny stocks is the rate of change in the stock can allow the investor to control their finance easily. As the stocks are of a low value by stock exchange standards, if they lose a percentage of their value this is only going to be a small fiscal sum. For example a one dollar stock losing 1% will only lose anyone with those shares a penny per share; a larger stock worth $1000 would lose ten dollars off the worth of each share.

The smaller shares allow the owner to have a greater diversity in their portfolio. The risk of huge loses can be countered by owning a number of penny stocks, whether oil based or otherwise. This means that while it is possible to have large amounts invested in the market in this way, the risk is minimised if one stock takes a severe hit.

This form of investment offers the buyer a dependable and potentially lucrative investment vehicle. With many major companies in the oil industry offering penny stocks it is clearly a secure partnership between the investor and the company. Oil penny stocks could be an excellent starting point and base to a profitable portfolio.

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