One a Penny, Two a Penny, Hot Penny Stocks...

by Maureen Cook

The peddlers of hot penny stocks today peddle their wares much like the hot cross bun streetsellers of the 19th. Century. They dont exactly hawk their wares round the shopping malls crying out "Get your hot penny stocks tips here", but telemarketers and professional rumor mongers are making sure that you get their message loud and clear. The message is the same - buy my stock - its just the medium thats different. The telephone, newsletters, the internet and word-of-mouth are the vehicles used to ensure the message is heard.

The old streetsellers were certainly streetwise; two a penny buns were seen as bargains to be snapped up before they went cold. Bought too many? The nursery rhyme offers a solution: "If your daughters do not like them, give them to your sons". Buy two a penny hot penny stocks and thats what you are likely to be doing, too: giving them away because theyll be almost worthless. Two a penny hot penny stocks sell like hot cakes only because the hot stock tip comes from unscrupulous promoters eager to spread the word that the stock is about to go through the roof. You wont make a killing, but the promoters who pocket your money will.

Lets pause for a moment and reflect on why anyone would want to go around circulating these rumors or peddling hot penny stocks over the phone. It just doesnt tally with human nature nor with the way in which power operates in the real world. Just think about it: isnt it far more likely that a small number of self-interested individuals are intent on dumping over-the-counter stocks onto you? Why, if they had genuine information on a hot penny stock about to take off, would they want to share it with you?

Its perhaps a truism to say that knowledge = power = money, but in the real world its also true that individuals who wield the most influence and power, and incidentally tend to make the most money, operate quietly behind the scenes. Thats not to say that these background figures, who buy and sell stocks over the counter, necessarily operate "under the counter". Nor is it true that theres no such thing as a good, informative penny stock newsletter. However, it does mean that, when being harangued by a zealous telemarketer to part with your money, you can be sure that a sinking company and a few unscrupulous individuals are lurking in the background.

Perhaps, though, you see two a penny stocks as providing a real opportunity to get in at the bottom and then make a big killing? Perhaps, when a stock has dropped, you might think that the only way to go is up? Dont get fooled, though, into buying "bargain" stocks solely because they cost less than before. They could continue to sink without trace. As children we must have been extraordinarily prescient when we added an extra line to the nursery rhyme and chanted the virtues of four-a-penny bargains: "If you havent got a halfpenny, a farthing will do". It wont do, though, if youre buying hot penny stocks. Dont ever feel pressured into buying a "bargain" that will almost certainly end up virtually worthless.

If you still think that youre acting rationally in buying hot penny stocks then youre behaving exactly as our 21st. century streetsellers would wish. But, remember, youre not a consumer buying hot cross buns: youre an investor aiming to make money by buying and selling hot penny stocks. Buying two-a-penny hot cross buns might make some sense, but two-a-penny hot penny stocks can mean buying, but not selling, for the price you want.

Not only selling but buying, too, becomes difficult when stocks are being traded at very low volumes but, at the same time, are being flagged up as the next hot penny stocks tip. A consistently high volume of traded stocks is absolutely essential, preferably on a daily basis. Average figures might seem good enough, but can often mask one insiders buying and selling activities. Lack of trading opportunities precludes any chance you might have of becoming a rational, educated trader as you will not develop a "feel" for where the stock is heading.

Learning how to become a rational, educated investor takes time. Theres no easy shortcut to the undoubted profits which exist in the market. Those individuals who want to reduce the risk of their hot penny stocks investment must be proactive and subscribe to a newsletter, research companies, and track investments.

Only when they feel comfortable, and have set themselves a limit of 20% of their portfolio to invest in hot penny stocks, should they prepare to do quiet battle with the market and silence the two-a-penny hot cross bun merchants.

Maureen Cook gives you a clear understanding of Hot Penny Stocks. She signposts the beguiling words of the tipsters, and the dangers inherent in trading penny stocks. To find out more, visit: http://www.penny-stocks.myknowledgevault.com

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