Buy Penny Stocks.

You must have heard many stories on how people make money from these stocks. I buy penny stocks if I'd EXTRA money to 'play with'.

Because, you can gain as much as 300% return in ONE WEEK with penny stocks, but in the same time, you can be selling your own shirts.

The reason is Penny stocks are not that cheap.


When it comes to stock investment, the business valuation determines how much the stock worth, not its price tags alone, this called, calculate intrisic value.

The simplest and easiest valuation method would be looking at individual price earning to ratio (P/E). The higher the P/E ratio, the more ‘expensive’ a stock is.

Though P/E ratio is not that accurate, it very handy when it comes to stock’s valuation. You can simply spot which stocks are overvalued and which are not. From there, study if the undervalued stock is really ‘cheap’, or its price went down due to some other fundamental reasons.

However, the P/E ratios for penny stocks are normally much higher than the other stocks, blue chip stocks for example.

This happens as penny stocks have much less historical earnings but many investors are betting on the expectation of ‘greater’ future profits.

As you are aware by now, the higher the P/E ratio, the possibility for the price to increase further in months (or even years) to come is less.

Penny stocks are manipulative in nature

As the penny stocks are very cheap in price, stock investors and traders can easily manipulate their stocks by putting in large buy or sell orders.

This especially true if 50% or more shares of that particular stocks’ are floated in the stock market. After all, penny stocks have very low market capitalization.

Speculative investors and hedge fund managers are normally the major players for this kind of stocks.

They form a syndicate team and agreed themselves to buy bulk of the share to pump up the share price.

Then, they make a statement claiming this stock is the ‘hot penny stocks’ or ‘the next Microsoft’ through any business media.