Are penny stocks a good investment?

Are penny stocks a good investment?

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Are penny stocks a good investment?

So you are interested in investing in penny stocks. Is it a good idea? Well to give you short generic financial adviser’s like answer – not really. But this is if you do know nothing about these stocks or you just very newbie unresearched investor.

But can we say there are no opportunities within the niche? To give you answer to this question – there are way more opportunities within the niche to find multibagger winners.

There are thousands of micro-cap stocks that are being traded on OTC markets and regulated exchanges.

But due to a volatile, illiquid and not always transparent nature of penny stocks many people believe all these stocks are the same fraudulent companies. But it is total nonsense. There are plenty of normal everyday small companies.

During my trading career, I have stumbled upon two companies that even Warren Buffett was invested in, so it all comes down if the company you are investing is doing a great job and have good fundamentals.

As well research paper “A Comprehensive Set of Growth and Value Data” by Michael W. Barad showed that value investing during researched period yielded biggest returns when comparing value and growth strategies among micro-cap (aka penny stocks), small-cap, mid-cap and large-cap stocks.

So to get back to the question. Are penny stocks a good investment? Yes, but only if you use value investing approach and will first and for most learn the markets if you are a beginner. Do not jump into this niche just because… You will be eaten alive.

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