There are many good penny stock investments available, which could turn a small amount of capital into a small fortune very quickly. However, to discover these you need to know what to look for and what to avoid. When searching for that one big payoff, steer clear of
following examples. The Phone Salesman - Anyone who is attempting to sell you investments over phone should be considered an enemy. They have high-pressure sales tactics, and effective, believable arguments. However, they are not doing you any favors, no matter how good they make an investment sound. They are operating in their best interest to dump over-the-counter stock on you, and money you pay in will go into their own pockets, or pockets of their company. There has never been a need for good companies that are going places to resort to these type of tactics, but there has always been a need for poor, sinking, or shady companies to do so. If you choose to ignore this advice you deserve what happens to your investment. You may also run into difficulty trying to find a buyer for your shares once you decide it is time to sell.
Very Low Volume Stocks - Without much trading activity it becomes increasingly difficult to buy or sell for prices you want. As well, it becomes nearly impossible to get an understanding of where stock price is heading, or to calculate fair valuations for company’s stock price. Not only that, but companies subject to low trading volume generally do not have a lot of positive interest.
The Hot Tip Stock - There are actually professional promoters who make a very good living generating and nurturing rumors about some penny stock that’s guaranteed to go through roof. The entire concept hinges on rumor being spread from person to person, at office, over phone, or at social venues. The promotional ploys can be very costly for investors who get involved without special knowledge about company or actions of promoter. In most cases if a stock really is going through roof you won’t hear a word about it, because a select few individuals will be very intent on keeping information to themselves.
Guaranteed Performance - If a stock is guaranteed to go up, it will almost always go down. Nothing is ever certain, especially on stock market. When someone guarantees certain performance out of a stock, they may be a promoter, naive investor, self-serving broker, or have heard guarantee from another source. In any case, don't believe them. Instead check into company yourself and if you feel it is a good investment, you may want to proceed.
