Study Up On Stocks Under 5 Dollars
There are both advantages and disadvantages to buying stocks under 5 dollars. Many people who would like to explore the market, but do not have much disposable income find this a painless way to play the market. It is also suitable for knowledgeable investors who are limited in their finances. However, if somebody is dabbling in stocks this cheap without knowing what they are doing, they stand to lose almost as much money had they made a huge investment in poor stocks. The following may offer some tips that a novice may find helpful if they are considering buying this sort of stock.
Stocks Under 5 Dollars: Where are the Good Deals?
Cheap stocks do not hold their value for very long. Most of the money made on these deals is made by the canny investor who jumps in and out of these deals. It is wise to research cheap stocks and see which ones are being reviewed in a positive manner by the experts. Achillion Pharmaceuticals, FuelCell Energy, and Paetec Holding Corp. are but a few of the companies at present with a possibility to give the investor value for their dollar.
Anybody who is going to dabble in the market must also make it a habit of keeping up with business and financial news. Because these stocks change so quickly, a review by a weekly columnist may be outdated by the time the interested investor reads the column. It is also wise to see which company has a track record as a steady performer, and which companies are usually losing money. Stocks are not like gambling on horses. A stock that is a steady loser is not bound to pay off sooner or later; it is just a bad investment.
Stocks Under 5 Dollars: Risks
The risks are many when it comes to buying stocks under 5 dollars. Indeed, many experts agree that making a few expensive investments is better than spreading one’s money around on various stocks that are cheap. It is important to bear in mind that cheap stocks are considered to be high risk investments with high rewards. In other words, the person buying these kinds of stocks is either going to lose big, or win big. Cheap stocks are often offered by companies with poor performance records who may not be around much longer.
The information above is not intended to discourage an enthusiastic investor from trying out these kinds of stocks. Rather, it is given as a cautionary note, with the intent that the reader should gain a bit of foresight before making any huge mistakes. It is also important to know that even the most savvy investors lose money when dealing with stocks under $5.00. The market is always a risky place to do business, and it holds no forgiveness for the ignorant. With that said, anyone who takes the time to research the market, read expert reviews, and become familiar with the financial pages of the newspapers will give themselves a fighting chance when purchasing stocks under 5 dollars.