Penny Stock Investments - Should I Get in on These?

So, you are considering penny stock investments and desire to know everything about it in just a few minutes of reading. Well, we can definitely try although it must be emphasized that like other investment types, penny stocks require continuing education in more ways than one.
Let's start with definitions. Penny stocks are defined in many ways depending on market capitalization, price per share and trading venue. If the issuing company only has US$50 to $300 million capitalization, it is considered a penny stock company. (Less than US$50 million dollars and it is considered a nano-stock) If the price per share is less than $5, then it is also a penny stock.
If it trades in the Pink Sheets or at the OTCBB, then it is penny stocks. The bottom line is that if it does not publicly trade in the bog stock markets like the NYSE Euronext, NASDAQ and AMEX, then it will be considered as penny stock investments. You will notice that penny stocks can fall in just one or all of these definitions but their nature will remain basically unchanged.
You should also take note that shares of penny companies are the riskiest investments available in the stock markets for many reasons. For one thing, there is very little regulation simply because the companies registered therein are not required to file audited financial reports with the Securities and Exchange Commission. Keep in mind that financial statement evaluation is an important part of investment strategy.
For another thing, there is a very low level of liquidity. This makes for a highly volatile market where it can be difficult to sell stocks in the future and where stock manipulation can easily happen. Add in fly-by-night companies and the risks just went sky-high.
Fortunately, there are ways with which you can still make decent profits from penny stock investments. The important thing is that you approach penny shares just like mainstream stocks although with greater levels of caution - tips on buying low and selling high, doing your research, and sticking to your entry and exit plan still applies.
Add in tips on avoiding biased recommendations and offshore brokers and you should be just fine. For example, you may be receiving spam mails in your inbox and mailbox, all of them from self-proclaimed experts with suggestions to buy into certain penny shares. Take them with a grain of salt, so to speak. You must instead use your own research, common sense and gut instinct. This also goes for offshore brokers in a boiler room operation. These dishonest brokers will do the pump and dump routine on your money if you are not too careful
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