Penny stocks : there’s always a risk factor linked with each stock, however being traded at few counters, the penny stocks are little more dodgy. The danger factor increases if you avoid some cares that are required. Hazards : The investment in penny stocks is highly dangerous due to diverse factors. Some of the common hazards are as given below.
– There is not any trustworthy and authentic information available for penny stocks. Whatever the info comes to us that comes either thru brokers or thru the agents of firms offering penny stocks. The vendor or broker who sells the penny stocks might get money from the company for selling the shares and so can mislead the financier. It’s therefore required for the financier to execute the detailed research before making an investment in penny stocks.
– It is frequently tricky to find the purchaser of explicit penny stocks you have acquired from the broker even the same broker might not be interested to repurchase the stocks from you.
-Sometimes the corporations having no money asset or no money history comes in the market and collect money from financiers and thus before making an investment in penny stocks, you need to observe the company offering the penny stocks. You must study the prospectus of the company extremely punctiliously and should see whether the share prices of the stocks are justified. Some of the dealers sometime inflate the stock costs deceptively.
– You need to know your broker, as he’s the main person to whom you are dealing. Ask about him from some of the other dealers and buyers. You must seek complete market info from your broker including the difference in bid and sale costs of the stocks. Ask him to provide his suggestions in writing and hunt for a 2nd opinion of the suggestions he made.
– You really ought to know the character of the stock on offer. Many times the primary public offers are rather more dodgy than other. You need to invest your cash after gratifying yourself from the assorted factors including the finance conditions and assets of the company. Occasionally you may lose a significant percentage of your investment or your complete investment in a particular penny stocks if a careful and sensible decision isn’t made.
– Before making an investment in a particular penny stock, you might ask about your broker’s history including any disciplinary action taken against him from NASD. You may seek further information regarding your broker from your state office of SEC ( SEC Commission ). If you still believe you have now become a victim of crime, our Fed law has provisions of rights and cures open to you. You can raise a complaint at the SEC Commission.
Author: Carmen O'ConnorThis author has published 1 articles so far.