AuthorZeb Pilcher |
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Week 43/14/2021 This week I continued to read The Little Book of Big Profits from Small Stocks by: Hillary Kramer. I mentioned the three types of low cost stocks in my last blog and this week I learned how to profit from them and what to look for in them along with general market tips and basic knowledge that is necessary to understand. The first piece of basic knowledge I learned about buying and trading these stocks are supply and demand and how it influences the market. The stock market is based of the general idea of supply and demand. The more demand for the stock the more it will increase. Penny stocks do the same but way faster due to the fact they have less supply than a large company because they are not worth as much money. This can cause drastic increases in the price of the stock once the herd starts to buy it. The trick to making money is to buy before the herd. This is why the stock market is risky. The herd may never come or the stock could plummet at any time. To decrease the chances of this, time and research are necessary. The first type of penny stock discussed in this book is the "fallen angel stock". This is a stock that were major company's and drastically fell off. There are Two questions you should ask yourself when it comes to these stocks the first is, "What went wrong and why?" and "Can the problem be fixed?". To learn this information you cannot look at spreadsheets of the stock but you have to do more intensive research of the company. Find the problem and determine whether or not the problem can be fixed. Another important factor is stocks that have sold off very quickly and not over time. If it takes forever to sell off there is an ongoing problem with the stock. To find these fallen angles you will need to scan for 52 weeks lows or the standards and poor 500.
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