Penny Stock Tips

Is there any thing called Penny Stock Scam. The simple answer is yes. Then what is Penny Stock Scam?  How Penny Stock Scams are made up? 

Essentially they are making use of the technology to make a Penny Stock Scam. Internet is the major source of Penny Stock Scam.  Millions of emails are send each day explaining unrealistic  things about these stocks.  Internet is very fast,  news can spread like fire through the internet.    They pump the price of the share and force innocent people to buy these worthless share.  You will see share price falling flat on the ground next day.   This is called “bump and dump”.

However there are real penny stocks, which can give you profit with in a short perios of time.  Do not shy away from investing in penny stock.  There is always room to make plenty of money in trading penny stock.

Do not make any fast decision on penny stock.  Do your reasarch carefully.  Always make an educated and well informed decision.

Penny stocks are low-priced shares of companies. The are also common shares, but mostly of start up companies or companies which has not come up with a successfull product.  Some of them consider it as very risky to trade penny stocks, becuse of irregular trading pattern.  At times it becomes hard to sell penny stocks and hence considered as risky.

Penny stocks are not traded in the mainstream stock markets (NYSE, NASDAQ, or AMEX). They have a market caps at $500 million. But when things go well with penny stocks, investors can buy them cheaply and profit from them quickly.  There is lot  of scam involved with penny stock, some of them just make a living by issueing a IPO of penny stock company, just be aware of such scam masters.

Inesting in penny stocks is always risky, you invest only as much as you can afford to loose.   You need to be lucky to reap the high margin of penny stocks.    Must do lots research on the stock you are going to buy and should have a clear entry and exit plan.  Always take a well informed and educated decision.

Biotech stocks have the potential of tremendous rewards if you pick a company with a product that makes it big.

What is Biotech?

Biotech companies manufacture drugs or other products using genetic engineering.  Most of these companies are started with some solid idea to come up with some winning product.  Examples are cure for Cancer, AIDS etc…  There are different points to analyze a biotech company.  It is much easy to spot a common stock like Wallmart , Google or MicrosoftEvery Biotech or pharmacy company has to pass many hurdles before they come up with a successful product in the market.

Generally biotech firms can be divided into three sections: large-cap pharmaceuticals, mid-cap, and small-cap biotech companies. The large-cap section actually includes the large biotech firms; GlaxoSmithKline, Pfizer and Merck.

Special Issues of Biotech Stock?

Food and Drug Administration (FDA).

All new drugs must go through a lengthy testing and approval process supervised by the Food and Drug Administration (FDA). Each drug must complete three sets of clinical trials called Phase I, Phase II, and Phase III, typically running 18 months, two years, and three to four years, respectively. Products successfully completing the clinical trials are submitted to the FDA for marketing approval, a process usually taking one or two years to complete.

Given these timeframes, it’s best to focus on companies with at least two products in phase III trails or awaiting final FDA approval. More is better, and you want companies with a steady stream of products in all testing stages.

Burning Cash

Most biotech firms have few, if any, products already on the market generating income. Companies without income to cover expenses are said to be “burning cash.” Analysts often compare a company’s assets to its “burn rate” to determine how long the company can survive before running out of cash. They say it’s better to stick with companies with a least two years supply of cash on hand.

Partners

Most biotech products sound promising. However, it’s difficult to know if there are better competing products in the pipeline, and the size of the potential market even if the product is successful. Small biotech companies usually form partnerships with large pharmaceutical firms to market their products. The existence of these partnerships means these in-the-know companies think highly enough of the product’s prospects to take on the marketing.