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PENNY STOCKS By David Dilmaghani First, I would like to say that what I have done with my portfolio in the Rye Country Day investment club is not possible to do in real life. I have turned $250,000 into $8,110,000,000 through the constant trading of various penny stocks. The reason that I cannot do what I have done in the investment club in real life are:
1.) Any amount of money affects the market in some way- especially penny stocks (it is possible that with just a $10,000 investment the stock would skyrocket.)
2.) It is not safe to invest in a company that you have little or no backround information on... and this is often the case when investing in penny stocks.
3.) In order to buy and sell, you need to have a buyer and a seller. This explains the terms Abid@ and Aask.@ When investing, you don=t always get the price that you want on your transaction. In some cases you might not be able to find a buyer who would be willing to pay the price per share that you want to receive. In some cases you might not be able to find a buyer at all, and the stock would plummet while you have your money stuck in it.
4.) Penny stocks are extremely unpredictable. Sometimes a penny stock could trade every 5 minutes, and go for weeks after that without trading. Sometimes the company could go bankrupt overnight.
5.) The company might not even be offering the amount of shares I want to the public, in which case I would not be able to invest billions of dollars in a company that only has 100,000 shares available at $.05.
6.) A lot of times penny stocks either go up or down a significant amount. Because the quotes for penny stocks available on the internet are delayed by 20 minutes, I could find out that I missed the boat and the stock already went up.
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