Successful Pennystock Investment Advice
October 25, 2009 by JR
Filed under Day Trading
I like penny stocks. Over the years I’ve seen some really good returns. I’ve also had some of my more speculative plays tank. And whether a stock climbs or falls, I will give credit where credit’s due. I did my due diligence and was right or wrong OR I got really lucky.
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While I take no credit for luck, I will take the pay off. I have no problem being right for the wrong reason.
The point is…the stock market is a gamble. No matter how exhaustive or flimsy your due diligence, your investing fate is in the hands of other investors.
When people ask me what I do, or who I work for, they invariably say, “Is there a real Peter Leeds?”, “Do you have any tips for me?” and, “I wish I knew the secret to the stock market.”
I respond, yes Virginia, there really is a Peter Leeds; no, I do not have any insider tips for you to trade on; and there is no recipe or secret sauce for picking penny stocks. I wish there was. I also wish I had the wisdom of hindsight…there’s a few penny stocks I wish I’d tapped into years ago.
If there is a secret to the stock market…I’m willing to guess that Warren Buffet and a few others know it. But I certainly don’t.
Maybe there is no secret except buying good companies with decent fundamentals and leveraged technology. Oh yes, and make sure to buy them when no-one else is. In a nutshell: buy wisely. Sadly, that’s not the kind of sexy advice anyone wants to hear.
Some pointers. It’s no surprise to learn that the stock markets have been on a tear lately, breaking records on the Dow day after day. This is due in part to large-cap stocks reporting strong earnings.
How does that help penny stock investors? Stocks, in large part, respond to marketing and speculation. Solid financial results from the blue-chips can create a sense of budding optimism… and that optimism can trickle down to both the mid and small-cap stocks.
To really capitalize on the sunny days, you need to remember that it’s good to buy what’s lagging or being overlooked. One oft mused investment kernel of investing wisdom is to “buy what’s low and not buy what’s high”.
Afraid of a recession? Don’t be. If a recession comes or even seems to be coming, it will lower interest rates and the stock market, and provide a great buying opportunity.
For most investors, it’s a no-brainer: buy low. If a recession gives you that chance, go for it. You make more when things are gloomy than when things are at their rosiest.
If the markets tank, that’s not the time to panic, that’s the time to buy. As one of my favorite columnists recently mused, “Buy when the boys and girls of CNBC are at their most gloomy, not when they’re cheerful. Buy on the sounds of muffled drums and mourning about the market, and hold on even when you get scared.”
Kick around the world of penny stocks long enough and you’ll learn that you…and you alone, are the recipe to your own success. We have a free society with free markets and unlimited opportunities.
So, what do you write on your penny stock recipe card? Do your due diligence, be aware, buy what’s lagging, know your limitations, and be patient. And ignore the stock tip you overheard at your office Christmas party.
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