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Microcap & Penny Stocks : SEXI - What can we learn from this experience
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To: Scott H. Davis who wrote (1)10/20/1996 8:36:00 AM
From: Malcolm Grover   of 22
 
Scott, the plain and simple fact is penny stocks are inherently risky. No matter how much DD one does, you can always get "taken" when dealing with this type of stock. I have seen it time and time again. Not all situations are criminal, some are simply poor or no management or the product doesn't do what it was expected to do. Or there is a sudden change of unforseen events that severly affects the company. This is the down side and unfortunately, that is the side that many penny stocks fall to. It is not rare for a penny stock to increase 1000% or 5000%, but staying there is another story. Generally, the price gets driven up on speculation and soon begins to erode. When it falls out of favor, it falls flat and trading activity drops to nil. I have been a victim of this myself and my only advice regarding penny stocks is: don't put your retirement money in them. Don't try to do it all in one stock (home run theory). If you must or want or enjoy (as I do) investing in penny stocks, then take an affordable amount of money and set a 20% or 30% return limit and get out and move on when you hit that. In many cases, unless you buy at the top, you can do that with the pennies, but it is a lot of work. You need to know about them before the "whole world" does. It is more that, then it is DD. Take care and good luck!!
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