Never invest in Penny Stocks

Samprad78 By Samprad78, 13th Feb 2013 | Follow this author | RSS Feed | Short URL http://nut.bz/1tnhuwiu/
Posted in Wikinut>Money>Investing

Never invest in a penny stocks. Such stocks are very risky and unpredictable

Never invest in Penny Stocks

My friend was extremely fond of making some quick gains in the stock market. Someone told him that if he invests huge amount of money in penny stocks then he would be able to make some huge profits. He told me that his idea was to invest into a stock that was priced at 30 paise and believed that very soon the stock would move to at least 45 paise and by that time he would have made nearly 50% profit. The idea looked quite enticing and the targets seemed pretty much achievable but I tried to stay out of it and just watch it from the galleries.

My friend put in nearly 30000 INR into the stock and was quite happy as he got nearly 300,000 stocks. I was wondering how that could have been but it seemed to be a highly traded stock in the market. I just kept it under my watchlist. I a month’s time I got an alert that the stock was down to 20 paise. After another month the stock was back to 30 paise and I was just contemplating maybe if it can rise from 20 paise to 30 paise in a month then it does have a potential to move to 45 paise as well.

But really a penny stock is a penny Stock. After another 3 months the stock was dead. Trading had stopped and now there was no volume in the stock. It was static at around 18 paise. After another 1 month I observed that the stock scrip was no longer valid. The company was buried and last traded price for the stock was 15 paise. My friend had lost all his money.

That’s the real risk of putting your money in a penny stock. You never know when the stock would be out of the exchange. It happens a lot of times that we feel because of the low valuation we can get double or triple returns in penny stocks. But that never really happens. Most of the times such stocks doom and leave us doomed as well.

Never invest in a penny stock.

Tags

Never Invest In Penny Stocks, Penny Stocks

Meet the author

author avatar Samprad78
An IT pro who loves writing on virtually everything on this planet

Share this page

moderator Steve Kinsman moderated this page.
If you have any complaints about this content, please let us know

Comments

author avatar Buzz
14th Feb 2013 (#)

Hi, dear Sam, you really excel in Economics. This is a crash-proof article as well.:D

Reply to this comment

Add a comment
Username
Can't login?
Password