The idea to buy penny stocks as an investment can be a double edge sword. An investment is something you put your money into in hopes to make a profit. A penny stock investment (in my opinion) is not such a good investment since most of these companies that have their stock price below one dollar, don’t ever make it to the next level.
These companies struggle regularly to find more capital to help keep their business going. To do more product research or to buy new equipment, these companies may never move above the price of a dollar per share.
Don’t get me wrong. There are plenty of private business’ that go public and go on to become a big player within their respective industry. During the dot com bubble era, penny stocks were growing by leaps and bounds, but most of that should not have happened. The companies that grew by more than 100%, quite a few of them were bankrupt in just a few years.If you were like the thousands of investors that thought that the ride was going to continued , you lost a lot of your capital.
Everyone that I knew who were trading stocks back then were trading penny stocks and I thought that it was crazy to put all you financial future in the hands of a few companies that were struggling to make it. I watched as my friends bragged about their gains and told me to get in on it, instead I invested in other solid companies that I researched myself. It took a while but the bubble did pop and my friends lost all of their gains as well as a good portion of their original money.
So if you’re looking for an investment, don’t let any penny stock be your first choice. Yes there are companies that make it, but not everyone can be a Google.
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