All too often I have heard my friends say things like, “Oh, I heard that so and so made a KILLING in penny stocks recently!” and I have to laugh to myself. I know that a lot of these people who think they are professional traders in the penny stock market are simply full of hot air and had a few lucky trades that made them think they were the next Warren Buffet. The truth is, while penny stocks can provide some of the most amazing returns on your investment out of any asset class, they take some skill the maneuver as well as time to master.
Like anything in life, trading stocks is a skill that can be improved upon. Don’t let anyone tell you that just because you weren’t born trading stocks of Qualcomm and Apple that you’re not cut out to be a trader. They have no clue what they’re talking about and have likely lost quite a bit of money in the stock market, making them bitter and discouraging to any fresh face that wants to try their hand.
Smart investing?
In order to improve, you first need to understand the fundamentals. Only then can you build a framework that can successfully take you from knowing a little and making a little money, to knowing a lot and making a LOT of money.
Believe me, the risk is high but the rewards are worth it. As they say, with higher risk comes higher reward. If you’re willing to play that game and are comfortable with a very high variance investment vehicle then I would urge you to get into penny stocks as soon as possible. There are very few places that you can put your money that can quadruple it overnight. In fact, unless you’re spending time at a casino (which is a complete waste of time), I don’t know of anything out there that can multiply your money as fast as investing in penny stocks.
So when you hear your friends boasting that they know someone killing it in penny stocks you should always approach the situation skeptically. However, you may as well ask to be put in touch with this person because they might be one of the few who puts their money where their mouth is and could teach you a fair bit about how the whole process works. Trust me, getting experience, advice and coaching from someone who actually knows what they are doing and has been through it all is invaluable as a beginner. It can speed up your learning curve significantly and let you dodge all of the simple beginner’s mistakes that almost everyone makes.
Penny stocks are also great because it’s quite easy to get started investing in them. You can take $50 and buy 10 shares of five different companies and be fairly well diversified while also risking almost no money at all. Don’t delay – every day you wait to check out penny stocks is a day you could have doubled your investment!