Penny Stocks can be a great investment, but you have to know what to look for, or sometimes more accurately, what to look out for. Buying Penny Stocks based on a recent email you received, or what you heard from someone you barely know, is not usually a good idea. Penny Stocks have historically been a source of wealth for many investors, but conversely have been the source of countless lost small fortunes. Determining what is good advice, mixed with all the hype, can sometimes be a very difficult process. You don’t have to be a stock market guru or brilliant investor to make a killing with Penny Stocks, but you do have to be willing to do your homework, and use a great deal of common sense to stay alive when you are swimming with the sharks in what can be dangerous waters.

There are many great small companies in existence today, struggling to stay afloat, that are tomorrow’s rising stars. Without the capital to grow and expand very few of our current generation of conglomerates would be more than a forgotten flash in the pan. Selling shares of a company can inject the needed capital into a niche business that may take it into the next level. However not all, if not most, of these tiny corporations will be around for very long. This creates an interesting situation for us, the investor or speculator. While the company in question may not be worth much today, what might that company be worth tomorrow? Hence the term speculation, which is the lifeblood of any Penny Stock trader.

Unfortunately, within this world there are a few unseemly characters, who seek to part you from your hard earned dollars. And, they will go to nearly whatever means is necessary to achieve their goal. PR firms, or Investor Awareness firms, are sometime hired to promote a small corporation’s stock in hopes of raising the share price. This in itself is not necessarily a sign of ill intent. Many times a small company may be very good at what it does, but for whatever reason finds itself unable to generate enough press interest in their successes to generate buying activity of their stock shares. However, this is occasionally done with the sole purpose of raising prices rapidly in an attempt to make quick profits on a very hollow company, one that has no real market or solid foundation. Hence the phrase, pump and dump. Pump and dump in a nutshell means, exaggeratedly “pumping” up the company in question with the primary intent of “dumping” their shares once the share prices begin to rise.

What can you do to protect yourself from being caught up in a pump and dump scenario? Most importantly you must use your own due diligence to wade through the hype. Ask yourself a few basic questions about the company in question. Are they making money? Are they creating new products? Are these new products going to be valuable in the future? The rules for trading Penny Stocks aren’t much different from those of trading large cap stocks. However, the risks can be much larger, but the rewards can be as well.

If you aren’t willing to do at least a bit of homework, investing in any stock is not a good idea. Never rely entirely on anyone’s advice, especially when dealing with Penny Stocks. But, if you take the time to research your investments, investing in Penny Stocks can be a very financially rewarding experience.

About the Author

Arthur Browning is a seasoned stock investor and author, who actively contributes to the Penny Stocks website http://www.1centstocks.com

Have you read any of the “Rich Dad, Poor Dad” books? They are excellent books for people who want to increase their financial savvy. I have been investing in mutual funds and stocks for over 10 years and it has helped increased our family’s financial worth. Now I want my kids to learn the different ways that they can get their money to work for them.

For Christmas, I got my 12 year old daughter stock in AFLAC and MDU. My 14 year old son got Emerson Electric and ITT Industries. As you can imagine, neither of them were thrilled with their presents. However, I also got them the game “Cash Flow 101″ (you can find this on the Rich Dad, Poor Dad website or sometimes on Ebay). This game is great to teach kids (and adults) how to make their money work for them. I recommend it highly.

Over Christmas, we spent almost one whole day playing the Cash Flow game. You are randomly given an occupation. My son was not excited when he got to be a janitor with minimal income and my daughter got to be a doctor. However, it soon became apparent that the doctor had much higher expenses and he learned that a janitor can still invest and make money.

I hope the next time I can tell you that the kids are going to NASDAQ everyday to check how their stocks are doing. Slowly but surely I think they are learning what it takes to make passive income (have their money work for them).

About the Author

Mother of 3, Loves to invest

Penny Stock Profits >> How to Buy & Sell Penny Stocks From Home … Penny Stock Day Trading .- By hhtpp://www.ProfitFromPennyStocks.com

Trading penny stocks can be very profitable but you have to be careful. The stock market doesn’t care if you are an experienced or a newbie stock trader. The rules and the trading opportunities are the same for every one at any time, so either youre going to make money when you make a trade or you are going to lose some of it in favor of the more seasoned stock traders.

As a penny stock trader your homework is all about studying and testing different online trading strategies that can help you pick and take advantage of hot penny stocks and at the same time protect your gains.

Just always keep in mind that a good penny stock trading system is simple and practical. Complicated stock trading systems will always make you slow in your decision making process or confuse you from the start.

There are some very good small cap and penny stock trading information websites where you can access practical online trading strategies that are easy to implement. One of those sites is Profit From Penny Stocks http://www.profitfrompennystocks.com

They focus on short term stock trading tactics that can help you pick and trade hot micro cap stocks and small cap stocks with prices ranging from $1 to $20 trading on the Nasdaq.

All in all, penny stock trading is all about trying to choose among the best stock opportunities and following your online trading plan with ease and simplicity.

Once you learn to master your stock trading decisions, you can aspire to produce consistent profitable results.

Learn how day trade hot penny stocks stocks in a practical way at Profit From Penny Stocks http://www.ProfitFromPennyStocks.com

About the Author

Profit From Penny Stocks helps stock traders around the world trade momentum small cap and penny stocks every day at http://www.ProfitFromPennyStocks.com

In a previous article, we discussed Ben Graham’s Net Current Asset Value
(NCAV) strategy and how it works. Here we will revisit Graham’s rules, which
were fairly severe in their original form in that they required the price of the
stocks under consideration to be trading at less than two-thirds of their NCAV
or Graham’s Number. These he considered to be “Bargain Issues”, and to
quote him: “Our purchases were made typically at two-thirds or less of such
stripped-down asset value. In most years we carried a wide diversification here–
at least 100 different issues.”

In a previous article, we discussed Ben Graham’s Net Current Asset Value
(NCAV) strategy and how it works. Here we will revisit Graham’s rules, which
were fairly severe in their original form in that they required the price of the
stocks under consideration to be trading at less than two-thirds of their NCAV
or Graham’s Number. These he considered to be “Bargain Issues”, and to
quote him: “Our purchases were made typically at two-thirds or less of such
stripped-down asset value. In most years we carried a wide diversification here–
at least 100 different issues.”

Such a wide diversification may seem excessive for most investors, but
with such low-priced stock there were evidently going to be a few bankruptcy
candidates. Graham considered this strategy to be suitable for what he called
“defensive” investors. He did acknowledge, however, that there were some
“enterprising” investors who could afford to be more aggressive from the point
of view of risk. To this end, he suggested a series of less onerous criteria
for selecting stocks which is outlined below.

First, list all stocks with Price/Earnings ratios below 9. Note: Graham was
writing in 1970 when P/E’s as a whole were not as elevated by technology
stocks as they are today. Readers who are less risk-averse or who just want
to consider a wider range of stocks may wish to vary the P/E in order to see
what comes up — perhaps up to 80 percent of the average P/E of the S&P 500
would be a good start. Currently the operating average is around 18 and 85
percent of that figure is just over 15. Graham did not state if he was using a
Trailing or Forward P/E ratio, but most likely he was using Trailing P/Es. I
personally prefer to use Forward P/E ratios, especially if they are significantly
lower than the Trailing P/E as this implies expected earnings growth and
therefore possible increase in the stock price.

Once we have a list of stocks meeting the P/E criterion, we consider the financial
condition of each stock, referring to the most recent balance sheet:
Initially, Current Assets must be at least 1.5 times Current Liabilities. This can
also be gleaned via a stock screener by displaying stocks with “Current Ratio”
>= 1.5. Total Debt must not be greater than 110% of Net Current Assets (i.e.
the sum of Cash & Cash Equivalents, Inventory, Accounts Receivable).

Looking further back, we need to find evidence of Earnings Stability, with no
deficit in the last five years, i.e. no evidence of an annual loss. Additionally,
evidence of earnings growth over a five-year period is a must. This can simply
be the consideration, for example, that 2004 earnings were greater than 2000
earnings.

There should be some current dividend payout. Finally, the current price of the
stock should be less than 120% of the NCAV per share or Graham’s Number.
Where to find this number? From the balance sheet, subtract Total Liabilities
from Current Assets, and divide the result by the number of shares outstanding.
Assuming you have a positive number that is greater than zero, the stock’s price
should not be greater than 120% of this number.

At grahaminvestor.com, we list stocks that are trading within 120% of the NCAV
per share. Since this was an important measure for Graham, you can start there
and work your way backwards through the other criteria.

Graham did not set any lower limit on market capitalization. “Small companies
may afford enough safety if bought carefully and on a group basis.” He meant
that a well diversified portfolio with a fair number of such companies stock would
protect the enterprising investor from the bankruptcy of one or two companies.

(c) 2005 The Graham Investor
You may use this article, as-is, provided this copyright notice is kept intact.

ABOUT THE AUTHOR