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Best investment: Make room for penny stocks

Today's Financial News - Posted November 11, 2009

iStock_000007334181XSmallThis is your chance to take back control of your portfolio. Instead of letting the market forces destroy your wealth, create hordes of new money.

By Andrew Snyder, TodaysFinancialNews.com

Baltimore – (TFN): There is no denying the small-cap sector is hot these days. While the blue chips follow in lock-step with the daily fluctuations of the dollar, investors in the nation’s smallest companies have a stake in actual fundamentals.

The divergence between the nation’s largest companies and its smallest is getting downright interesting. Even better, it is getting downright lucrative.

For proof, just look at the Nasdaq market’s top five winners today. All five of them are tiny, tiny microcaps.

The largest, China Housing and Land Development (NASDAQ:CHLN) has a Street value of just $129 million. Its shares are up by 30% thanks to a stellar earnings report.

I’d like to see General Electric (NYSE:GE) make that kind of intraday move.

The smallest of the top-five movers is Conolog (NASDAQ:CNLG), with a market cap of a paltry three million bucks. Its shares are up by more than 25% on a massive spike in volume.

Nasdaq’s biggest mover of the day is Park Bancorp (NASDAQ:PFED) a tiny retail banker based in Illinois. Its shares are up by nearly 50% on volume that is more than a hundred times normal.

Wouldn’t it be nice if you could get in on that kind of action?

You could, as long as you are playing the penny-stock market. If you’re not, don’t ever expect to rack up these kinds of gains in just a day.

Play to win

Every day, right around lunchtime, I log onto my screener and search out the day’s biggest movers. Without fail, the majority of the top ten (usually at least eight or nine) winners are from the small- or micro-cap sector.

Stocks with share price of fifty cents, five cents or ninety-five cents – penny stocks – are up by 15%, 60% or even doubling in value, while most of their bigger, “stronger” brethren are moving in lockstep with the overall markets, locked in as dangerous dependent variables to much stronger forces like the value of the dollar or Washington’s latest vote on how to rule the minions.

While penny stocks are not for everybody (thankfully), I am willing to bet they deserve a role in your portfolio.

Here is what is great about penny stock investing these days.

For the nation’s up-and-coming companies, the ones with revolutionary products or breakthrough technology, it does not matter that unemployment is at 10.2%.

It does not matter if the dollar is weak against the euro and the yuan.

And it most certainly does not matter what Obama, Pelosi and the gang are doing in Washington.

The average penny stock has nothing to do with macroeconomic themes and everything to do with specific fundamentals and a breakthrough product or technology.

Essentially, by investing in penny stocks you are taking control of your wealth, putting it in your hands instead of the greedy, manipulative hands of Wall Street and the nation’s leaders.

Who do you trust more?


Next Article: Gold miners: Play the little guys

Posted by Andrew Snyder · Filed Under Featuring..., Investment Strategies 

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