Anybody got any experience of dealing with Penny Shares

tonydee

Shatners_Bassoon wrote: »

High-Risk = High Return

That's what you have failed to understand and see the fascination of. There is little or no money to be made on the main FTSE markets safe 100 and 250 companies.

Look at RKH who were 30p in May 2010 and hit a high of 540p in Aug/September. That is nearly a 15x return and you simply do not get that on any other market other than the AIM market.

I've not failed to understand anything, and often deal in AIM listed stocks. As others have stated, the spread is normally large, illiquid markets often makes it harder to buy or sell. That's why I don't see the fascination

A FTSE 250 company for you, Afren. I first bought at 17p and have quite a few

tonydee

wriggly wrote: »

It's true that "High Return = High Risk". If the expected return is high, it is nearly always because there is higher risk.

What you state, that high risk means a high return, is not true. Otherwise, where is the risk?

Apart from all the other comments, "penny stocks" usually have fewer shares and are more illiquid, leaving their investors vulnerable to price ramping or manipulation.

Very true.

For every half decent penny share that 'makes it' there will be a 100 that don't. I know where I would rather put my money.

black_taxi_2

pound-cost ave monthly into a ftse250 tracker fund is sound

olbas_oil

It is worth trying to understand what is meant by 'penny shares'. It is really a bad phrase!

A 'penny share' usually means a small cap share = a small company. The actual share price could be above a pound. If you multiply the share price by the number of shares, you reach the cap. BP has a market cap(italisation) of £93billion. The price is £4.96.

At the other end of the scale Torotrak have a cap of £35million. The share price is 24p.

There may be another company with a cap in the billions, whose share price is in pence, and there are certainly going to be companies even smaller than Torotrak with share prices above £1. You don't tend to buy one thousand shares, whatever the price. Instead you say, 'I'll invest £1000 into this company'. As others have said, if the price drops by half, you lose half, whether you have 500 shares going from £2 to £1, or 4000 shares dropping from 25p to 12.5p.

There is a tendency for small cap shares to be more volatile than big shares, particularly when a larger proportion is held by private investors. Torotrak have gone up by 2p, as I write (=10%) on a new deal with MTD. (They will go up by several hundred % if they ever release news of a deal with a bone-fide car manufacturer, but I've been waiting years for that to happen!).

One view is that the private investor stands a better chance with small caps because they can do their own research, and maybe come to a conclusion that the price is undervalued. Whereas with the larger companies there are so many analysts crawling over them that the price always reflects the market expectation.

black_taxi_2

excellent post olbas oil

IronWolf

Shatners_Bassoon wrote: »

High-Risk = High Return

Every value investor knows this is complete rubbish. There are low risk - high return opportunities all around, there are also plenty of high risk - low return companies.

ses6jwg

i did pretty well off gulfkeystone and rockhopper. very well infact.

Antispam

printsandsticks :spam:mer

cashbackproblems

Shatners_Bassoon wrote: »

High-Risk = High Return

That's what you have failed to understand and see the fascination of. There is little or no money to be made on the main FTSE markets safe 100 and 250 companies.

Look at RKH who were 30p in May 2010 and hit a high of 540p in Aug/September. That is nearly a 15x return and you simply do not get that on any other market other than the AIM market.

Ditto

Do your research but there is big money to be made in oil/mining companies even if you just invest 2k if can triple quite easy, know when to take profit people hold and hold and then watch them go right down.

a good company which isnt even tht risky is sxx a great mid to long term penny share