Penny stock investing?

[Olav23]

Hi all, I was wondering if anyone ever buys penny stocks. I know a lot of these are like lottery tickets, you either cash in or lose it all in a lot of cases. But I saw an article today in Aviation week that a company called BlastGard won an award for innovation for some product that is basically bomb proof bubble wrap. Figuring that everyone is cashing in on defense/security stuff nowadays, I was thinking of buying some, but then saw its traded only on the bulletin boards and is a 90c (BLGA) stock.

So, do you guys ever buy into penny stocks with play money? Or is it usually a sucker's bet?

 

[wildcat]

Very tough to win in this area - I recommend BRSIX if you want to play in the micro area - not a penny stock fund though

You will face a few problems if you do:
1) trying to pick a winner - one product or one client sort of thing, never know if it will really take off
2) liquidity - thinly traded stocks so you may not be able to get in and out when you want to
3) bid-ask - spread between the 2 is huge

 

[Nords]

So, do you guys ever buy into penny stocks with play money? Or is it usually a sucker's bet?

Nope. I'd abandon the blackjack dealers for the penny slots before I'd buy a penny stock.

If you're going to invest, though, you should know who you're dealing with. Business Week hasn't run these articles for a few years, but I doubt that anything has changed:
Chop Stocks on the Rise

Not Exactly Gangbusters on Wall Street

 

[ats5g]

Here's the SEC's warning on Micro-cap stocks

Bomb proof bubble wrap? C'mon, their "technology" is still "patent pending". I might call the Washington Metro Authority [WMATA.com] to verify their trash can agreement.

- Alec

 

[Marketneutral]

Hire a monkey and buy a dart board.

Those are about your chances in this arena as a small investor. 

 

[Spanky]

It's highly volitile since market cap is very small. My experience - puchased 10 penny stocks 15 years ago - 9 went to zero and one went out 30x in one year. My net return was over 25%. Not bad but will stay away from them since my risk tolerance has significantly lowered over the years.