GreenGoblin
BANNED
- Jul 17, 2008
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Has anyone ever invested in penny stock if so how did it go?
When you buy a promising new stock at $.01 or $.02, it's easy for it to double or triple in value. Conversely, when the stock starts off that low, there's almost no where for it to fall lower. Because of the low cost, penny stocks allow you to contain your risk to a few hundred bucks, and only lose that amount if you miscalculated.
I used to do the "buy 1000 IPO shares, when it doubles sell half, then you're on a free ride" approach, but it became increasingly hard to get a broker to cooperate on the sell off part. I would end up demanding the broker sell it all off, because they gave me a hard time over selling any 'odd' fraction (they considered even 50% to be awkward). They all want to milk you to drop a few more bucks in a new company, regardless of the financials. Later I realized that the reason they were so reluctant to sell off was it was much harder work to resell a stock after the initial offering, as everybody preferred 'the next new thing,' instead of the last offering.
Penny stock brokers pushed buy and hold over buy and flip. So I got out of it in the '90's. Always remember the joke: A broker talked an investor into a stock, which went steeply up over the next few days. The broker called back and reported this, and got the investor to buy more, after which the stock went up still further. Finally, the investor contacted the broker and announced he wanted to sell. "Why would you do that," said the broker, "you're the only one buying."