Top Penny Stocks
Investors are continually rewarded by the performance of their shares which can be proven time and time again due to the nature of the longer term strategy that value investors appear to follow.
Diversification is the next factor that has contributed to the success of this style of investing and it is particularly important when investing in penny shares due to the higher risk associated with these shares . Things often do not go to plan when investing in the stock market and you should never put all your eggs into one basket as you could risk wiping out your entire investment!
{I recommend checking out a more in depth guide to investing in small cap stocks at A Guide to Investing in Micro Cap Stocks Guide To Small Cap Stock Investing}
Controlling your risk is even more important when considering investing in penny stocks. {Value investing can offer you some protection against market falls as the stocks are already trading at a lower price however if the share price does decline further this can also present another buying opportunity}!
Value investors are in generally in for the long haul and short term price swings are of small consequence to them. You need to ensure however that you keep on top of what is going on with the company and make sure you have an exit plan should things turn sour and you need to exit quickly .
{For more information look at how to profit from the stock market Best Small Cap Stocks}
You can start your search by looking on the pink sheet and OTCBB to find listings of small cap shares on offer . You will need to determine what the intrinsic value of the company and you can do this by looking at the company's financial history, profit and revenue streams and future earnings projections . As soon as you have an idea of what the company is worth then compare this to the trading price of the stock and ideally you will locate a company that is trading below its intrinsic value and you can buy these shares and wait for the rest of the market to also realise that the shares are undervalued and purchase them causing the price to rise .
If you work hard to take the time and learn along the way then you will become better at working out a company's intrinsic value but remember it is never an exact science!
Diversification is the next factor that has contributed to the success of this style of investing and it is particularly important when investing in penny shares due to the higher risk associated with these shares . Things often do not go to plan when investing in the stock market and you should never put all your eggs into one basket as you could risk wiping out your entire investment!
{I recommend checking out a more in depth guide to investing in small cap stocks at A Guide to Investing in Micro Cap Stocks Guide To Small Cap Stock Investing}
Controlling your risk is even more important when considering investing in penny stocks. {Value investing can offer you some protection against market falls as the stocks are already trading at a lower price however if the share price does decline further this can also present another buying opportunity}!
Value investors are in generally in for the long haul and short term price swings are of small consequence to them. You need to ensure however that you keep on top of what is going on with the company and make sure you have an exit plan should things turn sour and you need to exit quickly .
{For more information look at how to profit from the stock market Best Small Cap Stocks}
You can start your search by looking on the pink sheet and OTCBB to find listings of small cap shares on offer . You will need to determine what the intrinsic value of the company and you can do this by looking at the company's financial history, profit and revenue streams and future earnings projections . As soon as you have an idea of what the company is worth then compare this to the trading price of the stock and ideally you will locate a company that is trading below its intrinsic value and you can buy these shares and wait for the rest of the market to also realise that the shares are undervalued and purchase them causing the price to rise .
If you work hard to take the time and learn along the way then you will become better at working out a company's intrinsic value but remember it is never an exact science!
Source...