Micro Rad
Micro Rad
Beware of "Blue Chip" Penny Stocks
Let's play that old game of psychology, the association of words. We launch a company name, write the first thing that comes to mind. Level 3 Communications (LVLT), American International Group (AIG), Sirius XM Radio (SIRI), Tenet Healthcare (THC), Fannie Mae (FNM), Infineon Technologies (IXF), Genworth Financial (GNW), E * Trade Financial (ETFC), and Coeur D'Alene Mines (CDE).
Done with this group? Okay, let's add more to the mix: Unisys (UIS), Rite Aid (RAD), Ballard Power Systems (BLDP), Citigroup (C), and Blockbuster (BBI). Consider the first word that comes to mind for each of them - this stock was penny? More likely is that it has not, because not many people think that companies with a market capitalization as large as possible "penny stocks". However, all these companies are trading below $ 1 today.
"Penny stocks" have been attractive to investors as the holding point to a potentially great potential - and this is the problem here, the potential of the word. There is an old country saying that this potential is another word for failure - But let's take a look in a minute.
What is attractive to investors many novel is that you can maintain a level of participation 3 less than a dollar - even with a share of Coeur D'Alene, and Citigroup. However, do not compensate for the loss potential reward? 1000S No trading accounts American total stocks purchased under $ 2.00 are now useless.
There are several definitions for Penny stocks, but the only constant is that the stock is cheap and is often a small market capitalization. Interestingly, according With this definition, Citigroup is probably not a penny stock, or any of the other names mentioned above. But, however, are lower operating $ 1, so they are inherently very risky.
However, you can buy shares of the major powers of the old market of less than a dollar - Worthwhile? We will see an array of Citigroup. It is a daily chart accumulated since early July 2008. File short term high of $ 23.50 was reached In October 2008 but the population has been hit - hard. With the population of less than a dollar tumbling, it is a penny stock buyback?
In general, the answer would be no risk. stocks under $ 5.00 are generally high, under $ 2.00 are very high, and less than 1,00 generally range from $ 0. Many micro-company stock under the CAP for $ 1.00 (the kind you get advice "random hot" in the subject) are really, really SCAM / / Shell sham companies whose shares are in charge of a group. Many investment funds can not even buy the shares of companies trading below $ 10.
In the unusual case of giant companies that trade below $ 1.00 we see today, the answer or not to buy these is not fundamentally. These companies do not usually going out of business - but what probably will happen (what the market is price as it passes the extremely high risk) is that the equity (shares) have no value of the reorganized company, reimbursement of expenses (up to a point), then either re-issue new shares eventually go private or merge. But shareholders are not uncommon in most cases.
Could some of these blue-chip frank exchanges of less than $ 1 back? Certainly. But it is very likely not. So beware of bottom fishing in these names, unless you are ready to face the people is worthless.
Many traders fall into the charm of penny stocks, especially when they start investing. They think they can buy 1000 or more actions against 10 others. However, cent if the stock goes to zero, yet lose everything you put in $ Que So tread very lightly and not all the research you can dive before a toe foot pool penny stocks, including big names.
There's a reason penny stocks are penny stocks, management may be poor, plans poor business, bad execution of that plan a shift economic violence, too much debt, or simply an avalanche of sales and the negative sentiment. Whatever the reason, sure to perform your due diligence when it is reasonable to speculate in stocks very cheap.
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Article Source: ArticlesBase.com - Be Wary of "Blue Chip" Penny Stocks
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