Investing in Penny Stocks - What the Rich Really Do

The thing that you have to understand about investing in penny stocks, is that you are really buying at the ground floor.
You are trying to take advantage of companies that offer potential unlimited growth.
This is really the ABCs of how the rich get to be in the position they're in, from trading the stock market.
Most of them don't invest in standard blue chip stock.
They invest in a company before most people have even heard of their names.
It's really the essence of the old cliché: buy low and sell high.
The wonderful thing about investing in penny stocks is that you don't have to be rich.
To be perfectly honest with you, an investment of $2000 is probably more than enough to invest in a wide variety of penny stocks.
Now think about how far that $2000 is going to take you if you were to invest that money in one of the "big boys" like Microsoft or Wal-Mart.
You're not even going to get a hundred shares of stocks like that with $2000.
Also, you have to think about the limited growth potential of stocks like Microsoft or Wal-Mart.
It's going to be much lower than investing in small cap stocks.
With stocks like these, you'll be real lucky if you can pull in 10% a year, as opposed to some cheaper stocks which have gone up as much 500% in a day.
You may be wondering how that is possible? Well...
it's actually quite simple.
To use the example of Microsoft, to get a 10% return on investment, the stock would have to go up $2.
50 to $3.
00 a year.
When you talk about all of the ups and downs that are inherent in the market, that sounds somewhat reasonable.
However, when you talk about penny stocks that have increased by 500%, a 10 cent stock, would have to increase to 50 cents a stock.
It's only a gain of 40 cents but when you can afford to buy many shares the return is quite astounding.