Stocks, also called shares, represent owning part of a company. People who own stocks become shareholders with a vested interest in the company growth, hoping the shares will rise in value due to the company growth or success, thereby enabling selling the share at a higher value. Penny Stocks are simply stocks with a low share price (usually under $5).
Penny stocks usually belong to smaller companies that have not graduated into the main stock exchanges (where stocks are traded). The stock market is like an auction house where shares are bought and sold and buyers and sellers determine a price by bidding on stocks. The trick with Penny stocks is that the companies who issued the shares are not as stictly regulated by the SEC and provide less acurate or current information.
Knowing which penny stocks to invest requires a good deal of research and accumen.
Many people rely on news and Internet publications about Warren Buffet and his preferred stocks, but in reality by the time stocks get to this point, their value has been hiked up and they are not really such a bargain. Also, it is rare to see big firms invest in Penny stocks.
The best way to know which penny stocks to invest in and which penny stocks to watch, is to subscribe to a Penny Stock Newsletter that provides current and ral time penny stocks recommendations and penny stock alerts.
In addition to belonging to a good penny stocks recommendations service you should also perform some basic due diligence yourself. Analysis of penny stock companies usually relies on checking the company's management (is it solid), the company board members and shareholders and the history of the company performance.
Sometimes information on Pink sheet penny stocks and OTC penny stocks can be difficult to find. you will most likely find some of the relevant information on the OTCBB and the penny stocks message boards.
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