Penny Stocks For Dummies E-Book

Peter Leeds

• Herausgeber: John Wiley & Sons
• Kategorie: Ratgeber
• Sprache: Englisch
• Veröffentlichungsjahr: 2016

Seitenzahl: 528

Beschreibung

Want to make a big bet for an even bigger return? Start thinking small! While the majority of penny stocks are very risky, choosing the right ones can be extremely lucrative. Written by penny stock expert Peter Leeds--also known as The Penny Stock Professional--this hands-on, friendly guide takes the guesswork out of investing in penny stocks and gives you the knowledge to make smart investment choices that can yield big returns. In no time, you'll have the confidence and know-how to properly identify and purchase winning penny stocks--and get in on the ground floor of small cap stocks that can bring you high rewards. Updated and expanded since its previous publication, this new edition of Penny Stocks For Dummies provides the latest information, advice, and tools you need before considering investing in penny stocks. Once you determine investing in penny stocks is for right you, you'll find expert guidance on identifying growth trends and market sectors positioned for rapid growth, finding undiscovered penny stocks, and understanding the fundamentals of a potential investment in penny stocks. * Get the knowledge to better identify and purchase lucrative penny stocks * Identify growth trends and market sectors positioned for growth * Grasp the basics of penny stocks and make sound investments * Find undiscovered penny stocks If you don't have a lot to invest right now but want to multiply what you do have, penny stocks are for you!

Leseprobe

Penny Stocks For Dummies®, 2nd Edition

Published by: John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, www.wiley.com

Copyright © 2016 by John Wiley & Sons, Inc., Hoboken, New Jersey

Published simultaneously in Canada

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Library of Congress Control Number: 2016934645

ISBN 978-1-119-19182-7 (pbk); ISBN 978-1-119-19181-0 (ebk); ISBN 978-1-119-19180-3 (ebk)

Penny Stocks For Dummies®

To view this book's Cheat Sheet, simply go to www.dummies.com and search for “Penny Stocks For Dummies Cheat Sheet” in the Search box.

Table of Contents

Cover

Introduction

About This Book

Foolish Assumptions

Icons Used in This Book

Beyond the Book

Where to Go from Here

Part 1: Getting Started with Penny Stocks

Chapter 1: Getting to Know Penny Stocks

A Big, Fat, “Tiny” Penny Stock Summary

Defining Penny Stocks

Comparing Penny Stocks to Their Blue-Chip Cousins

Chapter 2: Deciding If Penny Stocks Are Right for You

Gauging the Popularity of Penny Stocks

Taking Stock of the Big Business of Penny Stocks

Making Sense of What You’ve Heard (Much of Which Is True!)

Making a Fast Million … Not!

Being Honest with Yourself: Are Penny Stocks Right For You?

Chapter 3: Buying and Selling Penny Stocks

The Ins and Outs of the Stock Market

Issuing Shares

Stock Buybacks

Acquisitions and Takeovers

Mergers and Amalgamations

Bankruptcies

Chapter 4: Avoiding Promotions, Scams, and Bribes

Why Penny Stocks Are Perfect for Price Manipulation

Who Is Moving the Price?

Rooting Out Poor Quality Companies

Obstacles That Even High-Quality Companies Face

Even the Good Can Die Young

Part 2: Research and Investment Strategies

Chapter 5: Developing a Strategy

Trading Risk Free without Using Real Money

What You Need Before Your First Trade

Choosing a Great Broker

Types of Trading Orders

Characteristics of a Successful Penny Stock Trader

Investing Versus Trading

Chapter 6: Doing Your Research

Doing Your Due Diligence

The Where’s and How’s of Research

Calling the Penny Stock Company

Corporate and Analyst Guidance

How Expectations Drive Prices: Getting Baked in the Pie

Penny Stocks Are Affected by Trends

Market and Company Risk

Buying What You Understand: The Free and Instant Advantage

Chapter 7: Picking a Winner

Narrowing Your Choices

Your Elimination Criteria

Who Do You Trust?

Stock Screeners

Choosing Penny Stocks Manually

Chapter 8: Penny Stock Manias

Wild Speculation and Investor Stampedes

Penny Stock Manias of the Past: Learning from Other People’s Mistakes

Surviving and Profiting from Penny Stock Manias

Spotting the Next Mania

Part 3: Trading Penny Stocks

Chapter 9: Trading Strategies

Scaling In and Scaling Out

Averaging Up … Not Down

Limiting Your Losses and Locking In Your Gains

Trading Windows

Timing Trades: When to Hold ‘Em and When to Fold ‘Em

Chapter 10: Fundamental Analysis

Financial Reports

Numbers to Look for in Penny Stocks

Acting On Analysis

Management Is Steering This Ship

News Releases and Events

The Outlook for the Sector and Industry

Chapter 11: Financial Ratios: Comparing Apples to Apples

Leveling the Playing Field with Financial Ratios

The Five Categories of Financial Ratios

Liquidity Ratios

Activity Ratios

Leverage Ratios

Performance Ratios

Valuation Ratios

Chapter 12: The Abstract Review in Penny Stocks

Making Products Meaningful with Branding

Harnessing a Unique Selling Proposition (USP)

Ensuring Product or Service Acceptance

Market Share

Barriers to Entry

Marketing Strategy and Results

Loyalty and Attrition

Chapter 13: Technical Analysis with Penny Stocks

When Technical Analysis Is Good

Why TA Often Doesn’t Work with Penny Stocks

Use Technical Indicators to Spot Trading Opportunities

All Patterns Break Down

Technical Analysis That Will Work with Penny Stocks

Part 4: The Part of Tens

Chapter 14: Ten Rapid Result Tactics

Call the Company

Average Up

Don’t Confuse Market Risk with Company Risk

Try the Product, Use the Service

Compare the Wares

Paper Trade

Know the Corporate Life Cycle

What’s Really Driving the Share Price?

Watch the Short Interest

Don’t Diversify, Pinpoint Invest Instead

Chapter 15: Ten Trading Truths

Investor Sentiment Is Contrarian

Big Moves Occur During Brief Trading Windows

Greater Volume Means Greater Sustainability

Making Up for Losses Is Harder than Preventing Them

Bigger Things Take More Energy to Move

Rapid Rise, Rapid Fall

Dilution Disguises Losses

Buy the Rumor, Sell the Fact

Don’t Try Catching Falling Knives

Resistance Levels Can Flip

Chapter 16: Ten Key Considerations for Companies

Barriers to Entry

Competitive Advantages

Market Share (and Room for Growth)

Customer Diversity and the Company’s Reliance

Allies

Insider Ownership

Institutional Ownership

Positioning

The Secret of Flag Fall Fees

It’s All About Recurring Revenues and Attrition

About the Author

Advertisement Page

Connect with Dummies

End User License Agreement

Guide

Cover

Table of Contents

Begin Reading

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Introduction

Some of the greatest companies started out very small, with their stocks valued at less than five dollars per share. In other words, they started out as what the investment world calls “penny stocks.” As those businesses grew in size, many of their shareholders grew in wealth along with the companies.

Few paths to significant and rapid wealth creation are as effective as investing in the right kinds of low-priced penny stocks. Excellent companies, regardless of their size, will always be able to provide their shareholders with impressive investment gains.

With increased opportunity, though, you have increased risks. Many people have been stung by those risks, and subsequently penny stocks have gotten a bad name in some investment circles. In almost all situations in which investors lost money, however, they could have easily avoided the downside if they had only followed the tips and suggestions in this book.

By showing you how to sidestep the risks, I clear the way for investors like you to profit from high-quality penny stocks. I help you find companies that have low debt loads, strong management teams, expanding market share, growing revenues, and game-changing intellectual property.

I wrote Penny Stocks For Dummies for two reasons. First, I want to help you — and investors like you — steer clear of the common (and easily avoidable) mistakes in penny stock trading. Second, I can show you how wonderful it will feel to get in on a great company early and build significant wealth from a small investment as the shares multiply in value many times over.

About This Book

In this book, you get the straight goods, free of any boring theories, complicated strategies, or inane details. In short, I tell you what you need to know to become a successful penny stock trader. Among the topics I cover are:

Why penny stocks have a bad reputation among many traders

Why avoiding the pitfalls is the first step to major profits

How to trade risk-free with no money

What the best penny stock investments look like and where you can find them

Why proper trading strategies can turn into money in the bank

How effective due diligence removes the guesswork

Why fundamental analysis is the most important step to truly investing well — and in solid companies

How technical analysis helps you develop your buying opportunities

How financial ratios make for better comparisons and, by extension, better opportunities

Why an abstract review gives you a major trading advantage

You can zip straight to the sections that interest you. I promise you will find what you want to know very quickly, and I won’t subject you to financial mumbo jumbo or unnecessary details along the way.

Whether you benefit from sidestepping all the junky investments out there or you profit big by finding really excellent (yet still undiscovered) stocks, this book has something for you. And the beauty is that the information you need is just a few page-flips away!

Feel free to skip the sidebars that appear throughout the book; these shaded gray boxes contain interesting info that isn’t essential to your understanding of penny stocks. The same goes for any text I mark with the Technical Stuff icon.

Within this book, you may note that some web addresses break across two lines of text. If you’re reading this book in print and want to visit one of these web pages, simply key in the web address exactly as it’s noted in the text, pretending as though the line break doesn’t exist. If you’re reading this as an e-book, you’ve got it easy — just click the web address to be taken directly to the web page.

Foolish Assumptions

We haven’t met, but I bet you’ve made some assumptions about me. For instance, you probably think that I’m a nerdy financial type and that, because I’m involved in the stock market, I’ve always been a good investor. Believe me, I really wish that were true. (The part about being a good investor, not the nerdy part.)

Well, I’ve made a few assumptions about you, too. Here they are:

You’re logical and make decisions quickly.

You’re willing to take the steps needed to better your situation, and you don’t shy away from excitement.

Someone you know (possibly you) has invested in penny stocks before — and almost certainly lost money!

You’re new to investing or have limited experience in trading penny stocks.

You have limited funds available to invest and you want to make the most of them.

You’re willing to accept a little risk in exchange for the potential to have greater returns.

You know that many of the best companies started small, and you realize that the shareholders in those companies reaped massive financial rewards.

Icons Used in This Book

To make this book even easier to read, I include a few icons to highlight certain types of information.

Abide by these quick points to save yourself time and hassle.

This icon identifies fundamental points that focus on basic rules and concepts of trading low-priced shares.

Heed these warnings to protect yourself from some of the pitfalls surrounding penny stocks.

You can easily skip over the content flagged by these icons without missing out on any benefits the book provides. However, for those who really want to know everything, give these a look.

Beyond the Book

In addition to the material in the print or e-book you’re reading right now, this product also comes with some access-anywhere goodies on the web. Check out the free Cheat Sheet for tips on protecting yourself from penny stock pitfalls, crucial criteria found in great penny stocks, and the no-cost method to becoming an excellent penny stock investor. To get this Cheat Sheet, simply go to www.dummies.com and type Penny Stocks For Dummies Cheat Sheet in the Search box.

Where to Go from Here

This book is set up so you can get right to the information you want. By all means, start at the very beginning if you feel like it, but if you’re like most people and have only so much time to devote to investing, flip right to the sections that interest you.

Decide what approach works best for you, and use this as a reference for anything you could possibly want to know about penny stocks. The table of contents and the index will help with that, or just visit the specific parts that will provide you with the most benefit.

Part 1

Getting Started with Penny Stocks

IN THIS PART …

Find out what characteristics distinguish penny stocks from other types of shares.

Uncover the truth about common assumptions — both positive and negative — about low-priced shares.

Get the scoop on which stock markets are the best for penny stock investors.

Examine the differences between investments of various sizes.

Become acquainted with events that can impact a company and its shares.

Learn how to protect yourself from scams and low-quality companies.

Chapter 1

Getting to Know Penny Stocks

IN THIS CHAPTER

Getting to know penny stocks

Separating fact from fiction: The truth about low-priced shares

Penny stocks are shares of companies that trade at low prices — typically anywhere from one cent to five dollars per share. The low-priced shares are usually associated with very small companies that are just getting started. When the companies grow, the value of their shares increases, making money for anyone who owns the stock.

I just described the upside of trading in penny stocks, and it’s this potential for making money that explains the growing popularity of this type of investment vehicle. Of course, not all small companies thrive or even stay in business — which brings me to the downside of penny stocks: Should the company shrink, or run into any number of other problems that I describe later in this chapter, stockholder shares will decrease in value, leaving investors with a partial or potentially complete loss of their investment.