Dalal Street Investment Journal|November 25 - December 8, 2019
Want to become rich – quick, BUY PENNY STOCKS!: This is a perception that a lot of investors still carry with them. Investors are not to be blamed for such a perception; after all, penny stocks do tend to surprise on several occasions- often positively. A look at the stock price performance since the corporate tax cut was announced in September 2019 and one might conclude investing in penny stocks is the best way to garner quick returns. Remember the focus is quick returns here. Says Amit Chug, who has been a successful penny stock investor over the years, “When it comes to quick returns- the answer has to be penny stocks. I do not think I have ever held on to penny stocks for more than a year. The thing with penny stock investing is that you need to over-diversify and I believe in creating an equal weightage portfolio of penny stocks. Definitely penny stocks investing is not advisable for all. If investing is a mix of art and science, penny stock investing is more of an art than science. One needs to master the art of contrarian investing to be a successful penny stocks investors”.
While penny stocks can turn out to be the fastest wealth creators for investors, the success mantra for such investing style is yet to be decoded. The element of uncertainty is unreasonably high in penny stocks and hence investing in them is not for risk averse investors. It should be noted that a maximum people that participate in the market are risk averse. So, it is safe to opine that penny stocks are not for most investors.
How have penny stocks performed :
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November 25 - December 8, 2019