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Buying Penny Stocks Without All The Work

Posted on December 26, 2007 - Filed Under Finance

Buying penny stocks, while it can be a lucrative form of investing, carries with it a considerable amount of risk. The risks of penny stock investing can be dramatically reduced by doing your homework on the stocks you are considering buying, but that homework is tedious and time-consuming.

A new computerized system has finally been devised that uses cold, hard, mathematical analysis to greatly reduce the risks and increase the profitability of buying penny stocks, while eliminating most of the work involved. As you might have guessed, this technology comes at a rather steep price, but some creative minds have come up with a way to make it accessible to the small investor while making the process of buying penny stocks simple and easy for even the newest of penny stock traders.

Penny stocks have considerable advantages to small investors as compared to other stock investments. The low stock price allows those with small amounts of money to invest to buy shares of multiple stocks and diversify their portfolios much more than they could with higher value stocks. Because even small dollar and cent changes in price can translate to large percentage changes in the price of penny stocks, good profits can be had with relatively low amounts of money invested.

For example, if you had $1000.00 to invest, and put it into some stock on the S&P 500 list at a purchase price of $100.00 per share, and it went up by $1.00 per share, your $1000 investment would yield $10.00. But, if you purchased $1000.00 worth of a penny stock at a purchase price of $1.00 and it went up by $1.00 per share to $2.00, your $1000 just became $2000 - a yield of $1000!

Because of the percentage of value change that a small dollar value change makes in penny stocks, you can lose money very quickly too. In addition to the inherent risks from normal losses in value, penny stock investing has more than its fair share of scams and fraudulent practices. Companies that issue penny stocks don’t have to file financial statements with the SEC (although some do so voluntarily), so it can be very difficult to find the necessary reliable information on a company to do a thorough analysis of the stock.

In some instances, hard-sell marketing tactics, such as email spam campaigns, paid promoters making cold calls, exaggerated press releases, and “boiler room” operations may be used to lure unwary investors into buying a stock to drive up the price and then the insiders suddenly sell off their stock at the inflated value, leaving the investors holding the bag as the price drops like a rock. As with any investment, the higher the potential return, the higher the risk, but in penny stocks, the relatively high potential for fraud drives the risk even higher than what is seen in other investments that are simply at the whim of market forces.

Up until recently, it would take a huge amount of time and work to thoroughly evaluate penny stocks in order to keep away from the scams and to get a decent return on investment. Several hours of research might be needed to evaluate just a single stock. While this work would usually pay off in the long run, it was often simply too time-consuming for part time investors.

Then along came “Marl”, which is a penny stock buying computer bot designed by a couple of guys that had the unusual combination of computer programming expertise and in-depth understanding of stock investing. Marl has several advantages over human investors, but the biggest advantage Marl has is that there are no emotions involved in his stock picks. Marl makes his picks based on cold, hard, statistical calculations. Plus, Marl can do a detailed analysis of hundreds of stocks in less time than it would take even an expert stock analyst to do a cursory evaluation of just one stock. This doesn’t completely eliminate the risks of buying penny stocks, but it does cut down on the risk considerably.

Marl has allowed some big investors to make many millions of dollars, and as such, Marl doesn’t come cheaply. At $28,000 to purchase Marl, he’s out of the question for most investors, but there is a way for investors with even the smallest of budgets to use Marl. Marl’s human inventors put out a very affordable newsletter with Marl’s top penny stock pick each week. In the case of those investors new to penny stocks, this could be preferable initially to owning Marl, as it limits their investment choices to just one stock per week as opposed to having to select from many options. This makes for easy stock investing for even the newest of “newbies” to penny stock investing.

Marl’s inventors have stated that they will be limiting the number of newletter subscribers that they allow, and the subscription option may not be available much longer. For the sake of small investors, hopefully they will reconsider and keep the subscriptions list open. For now though, small investors have a big opportunity for assistance in profitably buying penny stocks.

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