Penny Stock Investing Doesn’t Have To Be Scary

| October 29, 2015

Penny Stock Investing Doesn’t Have To Be ScaryPenny stock investing is a lot less scary, and a lot more comfortable, when you know what to do.

Here’s how the pros pick the best penny stocks.

Want some more tips?

Want to make sure you’re not making the common mistakes, so you know how to invest in penny stocks the smart way?

Here are 4 easy mistakes to make.  Avoid these, and immediately, you’ve got a huge advantage.

Penny Stock Investing Mistake #1

Buying stock in a company that can’t figure out its customers.

When a company doesn’t know what its customers want, the company is on a one-way trip to Chapter 11.

As simple as it seems, and as fundamental a business function as this is, companies often don’t know what their customers really want.

They come up with new products that never capture the public’s imagination.

Or the product they come up with their prospective customers are already buying cheaper from a competitor.

Penny Stock Investing Mistake #2

Buying stock in a company that is fixated on a business formula.

What worked a few years ago doesn’t necessarily work today.  Distribution models change.  What consumers want changes.  Technology changes.

In fact, it’s tough to think about something that impacts the ability of a business to make money that HASN’T changed.

Make sure the business formula is rooted in common sense and is flexible.  Make sure it reflects the realities of how business actually gets done.

Penny Stock Investing Mistake #3

Buying stock in a company that can’t learn from its mistakes.

Some penny stock companies just keep hitting the rewind button and repeating their blunders.

Want an example?  Take a look at Frontier Communications $FTR.

You know what Frontier did last month?  It actually went out and bought so called “wireline” phone assets.

People left and right are dumping their landlines because they have cellphones.

So what happens?  Frontier actually spends more than $10 billion buying landline networks assets in California, Florida, and Texas from Verizon.

Why is Frontier stubbornly clinging to the landline business?

Investors sure think the company is repeating its mistakes.  Check out how this penny stock has been doing…

$FTR stock chart A Scary Penny Stock To Avoid Penny Stocks

Penny Stock Investing Mistake #4

Getting caught up in the mania.

The dot com boom of 1999.  The infatuation with conglomerates in 1969.  Buying on margin in 1929.

Every now and then a mania comes along.  It sweeps investors up into the belief that things are different this time.

When we look back on the boom and bust, it makes perfect sense.  Being aware of a mania when it’s actually happening isn’t so easy.

Develop your own built in mania detector.  Be skeptical.

When somebody tells you, “It’s different this time,” hang onto your wallet.

4 Easy Ways To Do Better With Your Penny Stocks

There you go.

You’ve got the four big mistakes traders make when it comes to buying penny stocks.

Some companies can’t figure out what their customers want, and some can’t help repeating their mistakes.  Some penny stock investors get caught up in hype and some patiently sit back.

I hope these penny stock tips will help you, and you’ll have an easier time sizing up a company before you invest.

Got a question?  Have an investment idea?  Shoot us an email or leave us a comment on the website.

Better yet, if you own any of these stocks… or are planning to buy a stock like Frontier… shoot me an email and let me know why!

Good investing…

Brian Kent

Note:  If you’re interested in learning more about Brian Kent’s Penny Stock All-Stars premium service… and learning about the stocks we’re trading for profit… you can get the inside scoop on penny stocks here.


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Category: Investing in Penny Stocks

About the Author ()

Brian Kent is the Editor for He also pens Penny Stock All-Stars, an investment advisory focused on discovering small-cap and micro-cap stocks that are destined to become the market's next Blue Chips.