Finance George Best on 26 Dec 2007
Buying Penny Stocks Without All The Work
Buying penny stocks is potentially very profitable, but penny stock investing is also filled with risks. Thorough research and evaluation of stocks can greatly reduce the risk, but this process is tedious and requires a considerable investment of time and effort.
There is a new computer “bot” that has been created that analyzes penny stocks thorough in-depth mathematical analysis and by doing so dramatically decreases the risks and increases the profits from buying penny stocks, while greatly simplifying the work of choosing what stocks to buy and when. Of course, such a system does not come cheaply, but there is an opportunity for even the smallest of investors to reap the benefits of it.
Penny stock investing has big advantages when it comes to large, rapid returns on investment, and the fact that penny stocks are priced low enough for even very small investors to buy stocks and have the opportunity for a diversified portfolio. Because penny stocks have such low values, just a few cents change in the price of the stock can equate to a huge change percentage-wise, and potentially a huge profit to the investor, depending on the amount of the total investment, particularly in comparison to the profits possible with larger value stocks.
For example, if you had $1000.00 to invest, and put it into some stock on the S&P 500 list at a purchase price of $100.00 per share, and it went up by $1.00 per share, your $1000 investment would yield $10.00. But, if you purchased $1000.00 worth of a penny stock at a purchase price of $1.00 and it went up by $1.00 per share to $2.00, your $1000 just became $2000 - a yield of $1000!
Now, by the same token, penny stocks can lose a bunch of money very quickly too, which is one reason why it is important to be very careful when buying penny stocks. Another reason that penny stock investing is risky is because of shady or outright fraudulent practices of some individuals involved in marketing and selling penny stocks. Because companies that issue penny stocks are not required to file financial reports with the SEC, it can be difficult to obtain reliable information to really assess the stock.
In some instances, hard-sell marketing tactics, such as email spam campaigns, paid promoters making cold calls, exaggerated press releases, and “boiler room” operations may be used to lure unwary investors into buying a stock to drive up the price and then the insiders suddenly sell off their stock at the inflated value, leaving the investors holding the bag as the price drops like a rock. As with any investment, the higher the potential return, the higher the risk, but in penny stocks, the relatively high potential for fraud drives the risk even higher than what is seen in other investments that are simply at the whim of market forces.
Up until recently, it would take a huge amount of time and work to thoroughly evaluate penny stocks in order to keep away from the scams and to get a decent return on investment. Several hours of research might be needed to evaluate just a single stock. While this work would usually pay off in the long run, it was often simply too time-consuming for part time investors.
A couple of computer geeks who also had an in-depth understanding of penny stock investing have recently developed “Marl”, which is a computerized bot that can evaluate hundreds of penny stocks in less time than it would take a human to evaluate just one. Unlike human stock-pickers, Marl is 100% cold and calculating - there’s no emotion to cloud his judgement. Although even Marl doesn’t have a perfect track record, he’s a lot better than any human, and Marl can dramatically decrease the risks involved with penny stocks.
Marl has allowed some big investors to make many millions of dollars, and as such, Marl doesn’t come cheaply. At $28,000 to purchase Marl, he’s out of the question for most investors, but there is a way for investors with even the smallest of budgets to use Marl. Marl’s human inventors put out a very affordable newsletter with Marl’s top penny stock pick each week. In the case of those investors new to penny stocks, this could be preferable initially to owning Marl, as it limits their investment choices to just one stock per week as opposed to having to select from many options. This makes for easy stock investing for even the newest of “newbies” to penny stock investing.
Sadly, Marl’s inventors are indicating that they will soon cease to offer the newsletter to new subscribers. Hopefully they will reconsider and continue to offer this valuable service that puts small investors on a more even playing field with large investors. For the time being anyway, Marl provides small investors with a great opportunity to profit from buying penny stocks.