With all of the current turmoil in the stock market, many people are taking a long term, wait and see approach to investing. While it is true that you can’t lose any money you don’t invest, you are likely missing out on some incredible stock bargains including some great deals on penny stocks. If you aren’t familiar with what penny stocks are, they are stocks valued under a certain amount, usually either $1 or $10. Let’s take a look at just a few reasons why it is smart to buy penny stock at this time.
Incredible upside. Since most penny stocks are from companies that are just now hitting the scene, they are practically unknown, but they likely offer a product or service that no one else in their industry does. This puts the investor in a unique situation: the chance to get in on the ground floor with a company that might just go on to big things. The question, of course, is how can you tell if you are investing in the next Microsoft or not. The key lies in research and analysis. If a young company looks like they might be the next big thing and a team of analysts agree, than you might want to consider buying as many shares as you can.
It allows investors to dabble. While penny stocks carry just as much risk as other stocks, many people prefer to invest in penny stocks because the initial investment price is so low. You can buy hundreds of shares of multiple highly ranked penny stock companies and still have investment cash left over for blue chips or other more well known stocks. In short, penny stocks are the ultimate way to diversify your portfolio during uncertain economic times.
The ability to say I told you so. 5 penny stocks to buy One of the best parts of investing is hitting the jackpot with a stock you own. Most people that invest know others that invest, as well, and stock tips are often shared amongst friends and portfolios are a matter of personal pride. If you can say that you have been on board with a company since their stock price was $.15 and it is now $50 a share, you can bet that others will begin to come to you for stock advice on a regular basis. Owning stock is all about fostering a sense of ownership, and nothing fosters that sense better than owning a penny stock that is reborn as a highly respected, blue chip investment.
Getting companies on the rebound. While most penny stocks are made up of companies that have just been recently born, there is a whole other side of penny stock investing that many investors love just as much. Respected companies that have just gotten over a tough patch can see their stock values plummet all the way down to single digits. It is then up to the savvy investor to figure out if that company is going to continue to lose value or if rock bottom has been hit and the stock price is getting ready to take off once again. If you can get in at this low point, you’ll have a nice nest egg for your retirement.
By: Brent Crouch
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