Are You Just Starting Out In The Stock Market? If So, You

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Are you just starting out in the stock market? If so, you may be bewildered by the wide variety of stocks and wondering where to put your investment. Aside from the most dominant stocks, there are also other minor ones that are too small to be listed or have just come into the market. These are known as penny stocks and are known for their high risk and unpredictability - they may make enormous returns or the companies may go bust and you may lose all your investments. In this economic turmoil, shares are fluctuating in such a chaotic manner across all sectors and even large companies are affected. It may be time to rethink your strategy and invest in these penny stocks even though the risks are great. Most new investors fail when coming…show more content…
If you are a risk taking person and are willing to diversify your investments across multiple sectors, you could be rewarded greatly with great returns even if some of the stocks declined.
Micro-Cap companies have always provided the savvy and risk-tolerant with opportunity. Investing in smaller companies with low stock prices - even into the pennies-per-share range - is absolutely a legitimate investment opportunity, and there are hundreds - even thousands - of quality companies to choose from. Nevertheless, penny-stock fraud is an unfortunate reality. You absolutely have to understand who you are dealing with, and understand the ways in which unscrupulous, dishonest operators have historically been able to scheme to rip off investors. Here are the common scams to watch out for. The pump-and-dump This is the most obvious and well-known stock fraud scam. In a pump-and-dump scheme, scumbag market manipulators purchase thousands or millions of shares of low-priced stock. They seek out small companies that have no Wall Street or other established analysts following them, and with little media interest. After making the purchase, they will go on investing internet bulletin boards under fake identities and post bogus information about recent breakthroughs, new products, and exploding interest and sales. They also flood emails and fax machines, looking to drive up interest in the stock. As consumer interest rises, the frauds sell to
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