Penny Stocks?

Does anyone have any experience with them? TIA

Re: Penny Stocks?

I have 2 basic views on penny stocks.

- Since they're so cheap you can simply dump a few bucks into a few of them and let it ride. By few bucks I'm kind of thinking up to $500 each into maybe 5 of them.

- If you don't want to play darts, IMO, picking a winning penny stock takes way more research than finding an established company that has proven itself.

Some of my other views are:
I'm not sure if the ratio of big risk/big reward applies very well to penny stocks. Although the potential of hitting it big does exist, i'm not sure if you compare high risk penny stocks to a comparable high risk established stock, that the penny stock will have as high a payout.

IMO, one of the biggest drawbacks to penny stocks is my uncertainty that either fundamental or technical analysis can be applied to a penny stock.

What I mean by this is:
If you take a look at an established stock you can perform a fundamental analysis and study the company, industry, their financials, etc... And get a very good idea of the possible future of a company.
Or
You can analyze that same company's stock charts and do all kinds of analysis and you might be able to start to see how other investors are viewing the stock price of the company.

Whereas w/ a penny stock fundmentals are more difficult to get a hand on because their books generally are so messed up, the company could be in a difficult to understand market,m etc...
Technical analysis can be difficult because their trading volume can be so low that it's hard to make out what other investors think of the company.

I guess the only reason I'd dump money into a penny stock would be for kicks or to 'see what happens'.

ETA:
I would still perform some level of research and would probably never play darts.

Message edited 4/13/2011 10:07:50 AM.