Greed May Be Good But Not With Penny Stocks

I spent part of Friday night out with friends and we were swapping war stories (you know, guy stuff), when one of them asked me how my business was going.  Now remember, it was a casual time and I was among friends so my guard was down.

“Most people are too greedy”, I said with a smile.

Remember the commercial from years ago, everyone is in a busy place, (bar, office, restaurant) when someone leans over and whispers some stock advice to a friend?  Suddenly the room is so quiet you could hear the proverbial “pin drop”.  The catch phrase was.

“When (I’ll leave out the name of the firm) talks… Everybody listens”.

Well imagine a mini version of that (actually just four guys) and you get the picture.  My friend of course expected me to jump in and start pitching the merits of penny stocks, not to speak of people’s greed, but I wanted to make a point.

When you buy a penny stock (and especially if you belong to a good penny stocks newsletter “hint, hint”) you’ll be given multiple opportunities to “Buy Low” and the idea of course is to “Sell High”, but sometimes greed get in the way of common sense and instead of making money, money is lost and that’s not good for business, mine or yours.

So here’s my advice for everyone considering investing in penny stocks this year… Plan your exit strategy before you buy”.  Sadly stop loss orders can’t be placed on penny stocks so it’s crucial that you have a plan in place.  We’d all like to make one buy that would result in millions, who wouldn’t (think Dell Computer, Yahoo, Microsoft) but those opportunities are few and far between.  However the opportunity to double your money, cash out (sell your position) happens almost every day.

The economy has certainly been spiraling down over the past year, but now its 2009, we have a new president, change is promised, and change will come whether or not it’s exactly as planned.  It’s time for most of us to change the way we look at investing in penny stocks and don’t let greed get in the way.  Invest with your head, not your heart and never chase a losing stock.

All of us want to be on the winning team, and you will be whether or not it’s today, tomorrow or next week will depend on how you manage your money and your investments.

Okay, the guys are getting bored listening to me talk so I’ll leave you with this thought…

Greed may be good… but common sense is better.