Penny Stock Trading Advice I Give My Friends
The other day I opened my email and I got a message from a friend…
Nothing unusual there, I get hundreds if not thousands of emails a day.
But what she asked gave me pause…
Briana M. asked…
“Do you dabble much in penny stocks yourself? If so, what penny stocks do you recommend? My husband was talking about looking into these yesterday, so I thought I would ask if you had any advice 🙂 “
To be honest, my first thought was not to respond… I get questions like this from people all the time… I used to sit down and walk people through step by step how to trade penny stocks. It took a lot of time…
I used to give them my time and advice for free.
The problem was, most people are lazy.
They don’t want to do the work.
They don’t want to put in the time.
They don’t want to think.
So they end up ignoring my advice and investing in some risky penny stock… or worse, buying the penny stock being pumped by a scam artist. They lose all their money… and then they blame me!
How’s that fair?
Well I sent Briana and her husband a short response about trading and being safe and a few pointers about what to look for… but then I felt bad.
I didn’t really give them my best… and they’re friends.
So, I decided to sit down and give them a real look at trading penny stocks… I’m giving them my hard earned penny stock trading advice…
And today I’m going to give it to you too!
My Penny Stock Trading Advice For Beginners
So, what’s the very first thing you should know about penny stocks?
It’s not about the big winners… or the scam artists… or where to find information… or how to do research…
The first bit of penny stock trading advice for beginners is this –
It’s your money and NOBODY will care for it more than you.
Take this to heart. Nobody cares more about your money than you do. Everyone has a vested interest in the things they do… and you’ve got to be careful trading penny stocks.
Penny stocks are full of risks.
You can lose every penny you have trading penny stocks. (How’s that for honesty)
So you’ve got to be careful.
Penny stocks can go to ZERO in the blink of an eye… so make sure you only invest “Play Money”… you know, money you don’t need to pay the mortgage or rent… money you don’t need to eat.
Penny stocks are risky – so only use money you can afford to lose.
The second bit of advice I can give, is never trust anyone with a stock tip or idea. Just because your dentist, the next door neighbor, or some “Stock Guru” online says buy a penny stock… please don’t do it.
Take a moment and do some research.
They might have a great idea… or they might be trying to scam you.
Remember, it’s your money and you’ve got to watch it like a hawk. If you invest in a penny stock and it blows up, you have no one to blame but yourself.
Hard facts – but it’s the truth.
Oh, and while I’m talking about people giving penny stock tips… if they claim to have never lost money trading, they are either NOT TRADING… or they’re liars!
I’ve been in the finance industry and trading stocks for more than two decades… and despite all my knowledge and experience, I still have losses. It’s all part of trading…
So, enough with the doom and gloom.
Let’s talk about the fun stuff…
Fun Money and My Penny Stock Trading Advice
So, here’s a question… WHY do people trade penny stocks?
There are many reasons… it’s exciting, it’s fun, it’s a challenge…
But the real reason is – You CAN Make BOATLOADS of Money Trading Penny Stocks.
Let me give you an example…
My favorite Penny Stock Trade made me a ton of money. I came across a company called Primedia. Their business was simple… they print and distribute free magazines to people. They make all their money from advertising.
Since their biggest magazines were in the real estate industry, you can imagine that in 2008 they were hit pretty hard.
I stepped up and loaded the boat with stock at just about $1.00 a share.
Believe it or not… the company was trading at a p/e ratio of 1 and was paying a 28% dividend!
Of course the housing market started to improve slightly and the stock started floating higher…
By the end of the first year, I was up 100%… a few months after that I was up 200%… by the middle of 2011, the stock was trading over $7.00 a share.
My Gain on the stock was over 600%… not to mention the fat dividends I’d been collecting all along.
Eventually the gravy train ended when the company went private…
All in all, my returns were well over 700%.
And that’s why people trade penny stocks!
So, the next logical question is… how do you find stocks like that?!?
Unfortunately I’m running out of room for today… but in my next article, I’ll tell you all about:
- Looking at the financials
- Studying management teams
- Watching the stock
- And, avoiding scams
Category: Penny Stocks
