An Insider Look at Picking Money Making Penny Stocks

1. An Insider Look at Picking Money Making Penny Stocks Penny stocks are share offerings made to share investors by companies that are just too new or small to be listed with the dominant share exchanges. There are high growth possibilities, and your initial investment can be rather small, but you do stand the risk of the business becoming insolvent and you dropping your investment. Yes, there are definitely risks involved in these types of stocks; there is also a remarkable possibility for tremendous returns. Choosing penny stocks wisely means that you should have an unbiased appraisal of the company's business model. Similar to choosing stocks of any other sort of publicly traded company, it's necessary to read up on everything about the organization. This means understanding what the business do, the product they make, which products are offered, how their business model functions and who else is involved in their industry. It is unusual that the companies with these kinds of shares have hard to understand organizations - usually they are easy to understand and research. There are many of these kinds of stocks that are organizations that work with resource extraction - their price will appreciate and depreciate depending on the price of the commodity produced.

2. As you probably already guessed, penny stocks are considered to be investments with large degrees of risk. Naturally there's also the risk that the business won't make it even with adequate research. Keep in mind that the accounting reporting regulations for penny stocks aren't usually as regulated as stocks on national exchanges. One of the sorts of penny shares is known as a "pink sheet" and has virtually no regulation in regards to to their reporting and accounting standards. Since there's very little or even no regulation or standards, this makes this sort of share vulnerable to fraud and dishonest reporting. A common scheme is called referred to as a "pump and dump" - this refers to investors manipulating the price of stocks to rise drastically and then get rid of all of their shares at once leaving other investors in the dust. Now, even with that said it doesn't mean you should never invest in these stocks entirely. You can find lots of real, legitimate start up businesses, and they have to get going somewhere. Tons of companies that are classified as penny shares are destined to be a great success in the future. If you're someone who can choose one of these organizations, your return on your purchase of stocks will be very large. It's important to remember that finding the right penny stock will give some sizeable returns. Even if you suffer a loss on most of your penny stock selections, the one winner will return you such a sizeable profit that you'll forget all about the picks that didn't work.

3. To learn more, consult with the experts at Paradigm Capital Management, a penny stock and hedge fund managing firm. Our three decades of experience provides an exceptional level of insight that is reflected in our high-conviction portfolios. To learn more, visit here: http://www.paradigmcapital.com/