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Why Are Penny Stock Picks More Dangerous Than Buying Stocks Larger Companies?

It comes as no secret at all, that buying penny stocks, has for quite some time, been seen as being one of the most risky decisions that one can make, within these markets. While many people just blindly take that as an insurmountable fact and choose to leave them alone, we have found that most people do not in fact know what it is that actually makes them more risky than investments in larger corporations. So often, investors ask us why it is that these micro-cap corporations come with greater risks and though there are many factors involved, the core reasoning for this may come as quite the surprise.

The key component to penny stocks coming with greater risk, has to do with the fact that they are so much more thinly traded, than larger companies that are known of by far more people. In essence, if people don't know about a company, they naturally will not bother investing in it. This is where free penny stock newsletters and other third party organizations that provide information on these little known, lower priced companies, really come in handy.

When a stock is thinly traded, it is easier to manipulate it, being that strong buys or sells can significantly affect the direction that the company is heading in and this is the chief situation that tends to hold back micro-cap corporations. With less people trading these low priced stocks, we tend to see individual investors, often being able to control the direction of stock, regardless of the hopes of other investors getting involved. This problem is not seen with such prevalence in larger companies because they amount of money that such manipulation would take, deters the same level of trickery on the bigger exchanges, like the NYSE or NASDAQ. Over time many investors have come to rely on subscribing to free penny stock newsletter services like Penny Investor Network that have the ability to choose good penny stock picks, while at the same time raising awareness to these special plays. With more people knowing that certain smaller companies are out there and able to be traded, these companies often see increased interest in trading among investors, simply by virtue of recognizing that they are out there.

While light trading is a significant factor in why micro-cap's come with a great deal more risk, another major factor is of course, the fact that there have been many instances of company managers pirposely disenfranchising investors, to line their own pockets with large sums of money. There have been numerous instances of company managers, fraudulently inflating share prices with falsified information, only to sell against their own investors. There have even been times where company owners have completely made up their entire business plan and where things are headed. This sort of situation provides another glimpse into why some of the best information with regard to these lower priced companies, can be found through outside sources that have a vested interest in doing in depth research to uncover the truth for investors. The best penny stock picks tend to be those that are willing to open their books up to public scrutiny, which is why we have continued to stick to platforms like Penny Investor Network. We always tend to seek out penny stock newsletter organizations, that do legitimate research and show themselves to have serious business ethic, in their efforts to uncover information for investors. There are a lot of different organizations out there, so as we have said in the past, you should take it upon yourself to sign up t numerous organizations, until you have managed to find one that best fits the style of investment that you are most comfortable with.

At the end of the day, while buying penny stocks is certainly more risky than investments larger corporations, all stocks come with a certain degree of risk and cheaper companies do often see far greater percentage gains than can be seen with companies with far more inflated share prices. It is for this reason that we tend to seek out what we feel to be strong micro-cap picks, that have serious potential for future growth. More often than not, these incredibly low priced companies, will fare very poorly in the long run but those that do well, do so in a way that can change things in a powerful way, which is of course the mainstay of the allure of these lower priced stocks. Be sure to conduct intense research and look into organizations that can aid you in your quest for information, if you feel that the information provided by the companies themselves, isn't enough to warrant an investment. It's up to you to clear through the confusion and make the final decisions on what to do with your investments. and its employees are not registered as Investment Advisers in any jurisdiction whatsoever. We encourage all of those that are interested in trading penny stocks, or any other form of investment, to conduct their own research to garner a better understanding of what they are getting involved in. Be sure to read the full disclaimer, for further information on the penny stock picks released by our free penny stock newsletter platform, at: