Just would like to say I started with $1000 in my E-TRADE account & I'm over $4000 just a few months later and would have more if I would have just listened to your advice more. I'd like to say "Thanks and keep up the good work!"
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Exploration And Biotech Penny Stocks
June 22nd, 2006
Resource Exploration Penny Stocks:
(Looking for deposits of precious metals, diamonds, oil and gas, base metals)
Many of these penny stock companies make no or very little profit, and live and die based on speculation. So, what fuels the speculation, which in turn fuels the share price?
If there is a successful resource find in close proximity, it will drive speculation that this penny stocks' claims should yeild similar results.
The price of the underlying commodoty they are looking for will also affect the shares, as the value of what they may or may not find keeps shifting.
Biotech Penny Stocks:
(Searching for that miracle cure, or life-changing drug)
This purpose of business is to make money. If there were an exception to this fact, it may be the biotech industry.
Biotech is so research-driven, that there are very, very few biotech penny stocks that aren't losing money. They pour everything they have, and then some, into the expense-heavy strategy of discovering that world-changing drug or treatment.
The problem is that these companies are in a constant state of running out of cash. They take on debt and/or issue more shares to try and keep up. Either of these options are bad for shareholders.
Add to that, the vast majority of biotechs don't ever achieve what they are hoping to. If you invested in any ten random biotech penny stocks and held long-term, you would probably lose a lot of money.
So why the high share prices? It is all driven by speculation and potential. 'What if...' What if their cancer drug did work? Well, penny stock shareholders would become instant millionaires.
There is no shortage of biotechs with incredible stories, that act as though they are on the verge of that one big discovery. However, there is a shortage of biotechs that actually ARE on the verge of that one big discovery.
Investors get excited about the potential of these issues, and would hate to miss the boat, so these type of stocks generally trade well above where they should. They also raise a lot of money through issuing shares (which dilutes the value of the pre-existing shares), and use that cash to work on their vision. Unfortunately, that usually becomes ABC Biotech spending $10 million to make $1 million. Or, just as common, spending $10 million to make $0.
There are ways, however, to make plenty of money from biotech penny stocks. Don't try to guess which company may actually find that miracle cure - that is like throwing darts (at a very tiny board). Instead, as with all penny stock investing, the easiest and most effective way to make money is to play the perceptions of investors.
Look for a biotech with a multifaceted strategy (ie- they are working on four or six or ten different products). This lineup of products is called their 'pipeline.' Generally, the developement of the drugs will be stagerred, so that there will always be some new milestone or achievement coming up, each of which could give the penny stock a pop.
While they are waiting on Phase I FDA (Food and Drug Administration) approval for one drug, and waiting on Phase III approval for another, they are also looking to sell the rights to their most advanced product, while just starting their first-stage in house trials for another. The point is, the more activity, and the more products, the greater the speculative appeal. And the greater the profit opportunities for the penny stock investor.
To learn more about investing in the best penny stocks, visit Peter Leeds Penny Stocks. We will help you make money from penny stocks.
Also, tune in to my blog tomorrow, when I discuss other sectors in the penny stocks market.