So perhaps you have wanted to try your hand at investing in penny stocks. You have heard of unbelievable returns of 100% overnight with financial ‘experts’ claiming extreme gains at a very low risk. All you have to do is buy low and sell high. Easy!
Well 3 years ago this made total sense to me, a financial ‘expert’ said it was a for sure thing. Right? Right. Even better this financial ‘expert’ made me feel like I was an ‘expert’. Boy! What a good deal! I frantically opened my web broker. Excited to make enough money to buy everything I have ever wanted. I proceeded to check the losers by percent list (because that is what the professionals do). I forget what was on the top of the list but I remember that the top loser lost 64% on the price of their stock the previous day. I suddenly got extremely excited with the train of thought ‘Wow, it has already dropped 64%. I can’t go any lower, I’ll buy now and then sell when its gained 40-50%’.
Within 10 minutes of watching a video of a financial ‘expert’ talking about the ’for sure’ gains of penny stocks I had bought $1000 worth of a share that I knew absolutely nothing about. Not even the ticker. I was on the road to success.
For the next couple of days I sat and watched as my stock dropped 3%….8%…..17%….%25. Yes 25%. In a matter of days I lost 25% of my initial investment. I will never know what would have happened if I would have held the stock for 3 years. I quickly placed the order to sell, missing the market close by 2 minutes. When my order went through in the morning I lost not 25% but 27% because the stock price dropped.
Although I lost more money than I wish I would have, I learned a valuable lesson; Stay away from penny stocks.
PS. I told you I would eventually post about how I lost money on penny stocks!