November 2, 2007

Current Stock Quote

The peddlers of hot penny stocks today peddle their wares much like the hot cross bun streetsellers of the 19th. Century. They don’t exactly hawk their wares round the shopping malls crying out “Get your hot penny stocks tips here”, but telemarketers and professional rumor mongers are making sure that you get their message loud and clear. The message is the same - buy my stock - it’s just the medium that’s different. The telephone, newsletters, the internet and word-of-mouth are the vehicles used to ensure the message is heard.

The old streetsellers were certainly streetwise; two a penny buns were seen as bargains to be snapped up before they went cold. Bought too many? The nursery rhyme offers a solution: “If your daughters do not like them, give them to your sons”. Buy two a penny hot penny stocks and that’s what you are likely to be doing, too: giving them away because they’ll be almost worthless. Two a penny hot penny stocks sell like hot cakes only because the hot stock tip comes from unscrupulous promoters eager to spread the word that the stock is about to go through the roof. You won’t make a killing, but the promoters who pocket your money will.

Let’s pause for a moment and reflect on why anyone would want to go around circulating these rumors or peddling ‘hot penny stocks’ over the ‘phone. It just doesn’t tally with human nature nor with the way in which power operates in the real world. Just think about it: isn’t it far more likely that a small number of self-interested individuals are intent on dumping over-the-counter stocks onto you? Why, if they had genuine information on a hot penny stock about to take off, would they want to share it with you?

It’s perhaps a truism to say that knowledge = power = money, but in the real world it’s also true that individuals who wield the most influence and power, and incidentally tend to make the most money, operate quietly behind the scenes. That’s not to say that these background figures, who buy and sell stocks over the counter, necessarily operate “under the counter”. Nor is it true that there’s no such thing as a good, informative penny stock newsletter. However, it does mean that, when being harangued by a zealous telemarketer to part with your money, you can be sure that a sinking company and a few unscrupulous individuals are lurking in the background.

Perhaps, though, you see two a penny stocks as providing a real opportunity to get in at the bottom and then make a big killing? Perhaps, when a stock has dropped, you might think that the only way to go is up? Don’t get fooled, though, into buying “bargain” stocks solely because they cost less than before. They could continue to sink without trace. As children we must have been extraordinarily prescient when we added an extra line to the nursery rhyme and chanted the virtues of four-a-penny bargains: “If you haven’t got a halfpenny, a farthing will do”. It won’t do, though, if you’re buying hot penny stocks. Don’t ever feel pressured into buying a “bargain” that will almost certainly end up virtually worthless.

If you still think that you’re acting rationally in buying hot penny stocks then you’re behaving exactly as our 21st. century streetsellers would wish. But, remember, you’re not a consumer buying hot cross buns: you’re an investor aiming to make money by buying and selling hot penny stocks. Buying two-a-penny hot cross buns might make some sense, but two-a-penny hot penny stocks can mean buying, but not selling, for the price you want.

Not only selling but buying, too, becomes difficult when stocks are being traded at very low volumes but, at the same time, are being flagged up as the next hot penny stocks tip. A consistently high volume of traded stocks is absolutely essential, preferably on a daily basis. Average figures might seem good enough, but can often mask one insider’s buying and selling activities. Lack of trading opportunities precludes any chance you might have of becoming a rational, educated trader as you will not develop a “feel” for where the stock is heading.

Learning how to become a rational, educated investor takes time. There’s no easy shortcut to the undoubted profits which exist in the market. Those individuals who want to reduce the risk of their hot penny stocks investment must be proactive and subscribe to a newsletter, research companies, and track investments.

Only when they feel comfortable, and have set themselves a limit of 20% of their portfolio to invest in hot penny stocks, should they prepare to do quiet battle with the market and silence the two-a-penny hot cross bun merchants.

About the Author

Maureen Cook gives you a clear understanding of Hot Penny Stocks. She signposts the beguiling words of the tipsters, and the dangers inherent in trading penny stocks. To find out more, visit: http://www.penny-stocks.myknowledgevault.com

Peter Lynch has long been one of the most revered peronalities in stock investing. His returns as a manager of the Fidelity Magellan Mutual Fund were extraordinary, and the huge influx of money into the fund largely because of his stewardship made it the largest mutual fund ever with him at the helm. But Peter Lynch is also known for a series of books he wrote which made investing easy to understand for all people. “Beating the Street”, “One Up on Wall Street”, and “Learn To Earn” all gave a plain-spoken account of what Peter Lynch had learned in his many years of successful stock picking. He laid his philosophy out into a series of well respected books, and many people have used his techniques successfully to find great stocks of their own to invest in. Most of his principles are as applicable today as when he first introduced them. We’ll take a look at a few of these briefly:

Peter Lynch’s greatest teaching was that we are all surrounded by superior investing ideas if we open our eyes to the possibilities. Behind every great stock is a great company, Lynch figured. So the next time you’re at the mall, pay attention to which companies are doing the most business. Which store is really crowded? What restaurant chain has really long lines when you go there? Think of a company that moves to your town and dominates the local competition. These companies, Peter Lynch told us, are the ones that grow into the big winners on Wall Street. And companies that go from tiny seeds to huge multinationals make their investors rich. Most of the battle in investing is finding the best companies and putting the money into them when they’re just beginning to grow.

Peter Lynch loved growth stocks. He had his biggest gains when he invested in stocks of companies that were hot at the time. As they ascended into the highest arc of their growth phase, their share price also sizzled. Investors who get in early, at the beginning stage end up making boatloads of dough. Get a few of these twelve-baggers, as Lynch called them, and you’re well on your way to easy street. He followed his own advice and often hit huge returns on several stocks that would save his entire portfolio return for the year. If you’re pretty sure you’re onto a winner, then you need to swing for the fences when your time at the plate occurs. Companies that have rapidly accelerating profit margins and increasing sales have stocks that rise along with them. As the business expands, the company’s share price rises accordingly. If you can find a micro-cap company that ends up becoming a large cap during the time frame you hold it, you’ll have substantial returns.

It’s impossible to summarize the written and spoken words of a great investor like Peter Lynch in a space like this, so I’ll encourage you to do more research and check into this series yourself. All of the basic priniciples of growth investing and portfolio management are covered, and he’s also an upbeat writer who illuminates a great many bullish insights you may not have looked into before. Concentrating on a portfolio of growth stocks has worked for others, and it may just work for you.