If you are someone who follows the stock market news, one thing would have occurred to you, like it has occurred to me, every authority in the stock market field is talking about Penny Stocks.
Another thing that has also occurred to me is the fact that many people do not know what penny stocks are all about and the few that know have been silently smiling to the bank with the profits made from these stocks.
So, what are Penny Stocks?
Penny stocks are majorly stocks that are N5.00 and below. However, a few of those above N5.00 can also be referred to as penny stocks i.e. Japaul Oil, which is now on technical suspension at N6.02, as a result of its forthcoming public offer.
These stocks have the tendency to rise faster than Blue Chip companies while also giving the investor a higher percentage in profit. For example, if you bought ABC Penny Stock company at N2.00 and sold at N7.00, you would have made 350% profit whereas, if you bought Blue Chip company XYZ at N18.00 and sold at N31.50, you would have made only 175% profit. That's the beauty of investing in penny stocks, you buy almost extremely low and sell moderately high and coupled with this is the fact that you can start with as low as N10,000 and if you can afford more, the better for you.
However, to trade penny stocks you have to open a CSCS account through your stockbroker, pay some money with which you instruct them to buy a particular stock for you from the secondary market, which means, it's not an initial public offer(IPO), public offer(PO), rights issue or private placement.
You also have a part to play, for, apart from God, every man is responsible for his own success. As such, you would need to watch the stock market price / table, so, that you would know when to instruct your broker to sell i.e when it has made considerable profit, which is usually a pre-determined decision. Your broker would never sell your stocks without your permission, so, you have to actively monitor the stock table. As the saying goes, "where a man's treasure is, his heart is".
I did mention above that selling is usually a pre-determined decision. Yes, you would need to plan your exit point/price and stick to it. Greed must not play a part here, remember, "little drops of water, make a mighty ocean". Asides that, penny stocks are best traded on a short to medium term period.
I am not claiming to be a stock market guru or a professional on penny stocks, far from it but I keep my ears close to the ground while also doing a lot of reading and research. Hence, all my tips are purely based on any information gathered and/or knowledge gained in the process.
So, what are the stocks to watch out for? That would be for my next post, but till then, take this and run with it:-
--- Although on technical suspension(i.e.put on hold at a particular price in the stock exchange, as a result of a forthcoming public offer), Japaul Oil is a very good stock to buy now, if it is still available and you can get it because in the very near future, talking about months, while others are waiting for their certificates from the public offer, you would be reaping bountifully and smiling to the Bank.
For more on Penny Stocks to invest in, keep a date with this blog and if you have any concerns or enquiries, do leave a comment.
Passionately committed to raising YOU to great financial heights,
Derin
Thursday 20 September 2007
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7 comments:
I quite agree with you as per pennystocks. It is a more profitable way of making cheap money.
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Yeah penny stoking is good business.
But, like all other things The Nigerian syndrome. You cannot get the books of these companies anywhere, so how would you know which would rise? or do you just put your money in a company without knowing anything about thier business or profit position?
I used to think that public quoted companies are mandated by law to publish their reports.
Hi Derin,
Good morning. Just thinking, do you have a stock broker who can help us get materials when we need to know the figures behind these coys? I won't mind using such a broker.
Hi Olajide,
I believe any good stockbroker should be able and willing to make available to investors, materials that would guide decision making. Two pretty good stockbrokers that you can try out are CashCraft(one of the oldest and the best) and Future View Securities. You can check for their contact details on google, however, you might also want to watch out for the posted results of audited reports of these companies in the Newspapers.
Penny Stocks have the potential to grow money very quickly. Because of the term penny stock, one may go up to high level. One must also understand what goes up can come down, so rapid growth can mean rapid decline.
Excellent post! this case study gives me a lot of things to think about. I think this would be nice and helpful to others. Thanks for the post.
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@ Matthew
Thanks for liking my post and dropping your comments. Visited your site, nice thing you have going there. Thumbs Up!
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