Making Money With Penny Stocks

One thing I’m discovering as of lately is that there are a lot of black people who know absolutely nothing about the stock market beyond the stock market being this magical place that white people tend to get rich off of.  Now understand, I am in no way a stock market expert, so please don’t make that assumption about me.  What I do know is, I’ve been making some money lately playing with penny stocks & I’m going to tell you how you can possibly do the same thing.

So what is a penny stock?

A penny stock is any common stock valued at $5 or less per share.  Penny stocks typically trade outside of major market exchanges at relatively low prices & have a small market capitalization.  These stocks are often times highly volatile meaning you can lose money playing with them due to their high levels of uncertainty…BUT you can also make a lot of money playing with penny stocks as well.

So how does one make money off of a penny stock?

Everybody has heard the phrase “buy low sell high” in regards to stocks, but in regards to penny stocks, that phrase is actually the perfect descriptor for how to engage a penny stock.  Most people who participate in the stock market often buy stocks for the long term meaning, they buy stocks here and there across various industries with the sole purpose of holding onto these stocks for months & years in hopes of seeing their investment turn a profit as the share price grows for the stock.  When it comes to penny stocks, most people who buy them are not looking to hold onto a penny stock for years in the same manner as that of a regular non-penny stock (something like Nike or Disney stock).  People who buy penny stocks are often looking for a “quick flip” I guess you can say.  Meaning, people will literally buy hundreds of thousands into the millions of shares of a penny stock just to make a quick few hundred to a few thousand dollars off of the share price of that stock literally moving up 1 one-thousandth or 1 ten-thousandth of a point in value.

Ex:  I currently own 1M shares of a particular penny stock that I paid $900 for which means that when I bought the stock, the share price was $0.0009/share (sub-penny).  At the time of this writing, that particular stock is valued at $0.002/share which means my 1M shares are now worth $2000.  That means I made my $900 investment back PLUS an $1100 profit on top of it.  That $1100 literally came from the share price moving from 9 ten-thousandths of a point to 2 one-thousandths of a point in price…seriously.  If the share price were to go to just 1 cent per share, I would make $10K off of a $900 investment.  50 cent would turn into half a million dollars, $1 would turn into $1M and so on.

Now the chances of that actually happening are relatively low, but the chances of me making a few hundred to possibly a few thousand dollars off just the decimal point moving up 1 or 2 points is realistic due to me owning such a massive amount of shares.  Seriously, every time the price goes up just 1 ten-thousandth of a point, I make $100.  If it goes up just 1 one-thousandth of a point, I make $1000.  Conversely, if that price goes down I lose either $100 or $1000 respectively.  But that’s just a risk I’m willing to take because history has proven that the odds of a stock just going down & staying down is relatively small that it’s not even worth pondering over.  Damn near every stock in the world goes up.  Sure, a stock may fall here and there, but historically they’ve always came back up.  Just check your 401Ks if you have one.  Back in 2008 during the Great Recession, I’m sure a lot of you saw your money getting lower and lower, check them now and most of you should be back to where you started or even higher.  Matter of fact, hate him or love him, but the market has been skyrocketing since Trump took office, so I’m sure some of you who hate Trump out there have been benefitting off of the market as a result of him being President.

So how do you actually get started in buying stocks?

It’s rather simple.  I deal with a company called TD Ameritrade although there are other companies out there who offer similar services.  If you want to deal with TD Ameritrade basically all you need to do is create a free account with them, deposit some money with them to be used for buying stocks (I started off depositing just $500), download their “think or swim” app to your phone to buy/sell/monitor stocks, then go get rich.  Seriously that’s how easy it is to get into the market.  Now all of the research for what type of stock you want to buy ultimately falls upon you, but there are apps to help make informed decisions about stocks to purchase.  I use Yahoo Finance, Business Insider, TechCrunch & Reuters to read up on information about various markets and companies I may want to consider buying into.  Also, there are penny stock groups on Facebook dedicated to posting information specifically about penny stocks only to help you find these penny stocks floating around on the market.

To wrap this up, please understand that I am no stock market guru nor am I trying to pretend to be one.  If you are looking for retirement advice from playing the stock market, don’t seek that advice from me.  Maybe tomorrow I will be that guy, just not today.  I’m simply sharing with you things I’ve actually done to make a few bucks here and there that didn’t require me to actually work 9-5 to generate that money.  Will I become Warren Buffet rich doing this?  Probably not.  Will I make a few hundred to a few grand doing this?  Probably so.  Will I potentially lose a few hundred to a few grand?  Probably so.  Will I keep playing with penny stocks regardless of the risk?  More than likely.  Should you start buying penny stocks?  That’s all on you.  I suggest playing the stock market regardless with regular stocks & penny stocks, just understand that there is a risk to lose money no matter how you choose to participate in the market.  But one thing for sure is, if you never participate, you will never make any money at all.

Side note:  For those you who want to learn about the stock market before investing any money into it, there is a website called Investopedia that offers a plethora of information about the stock market for free, but that’s not even the best part.  Investopedia has a stock market simulator based off of the real stock market.  If you create an account with Investopedia, they will give you $100K worth of “monopoly money” to invest into their simulator so that you can learn how to invest with real companies without actually risking any real money in the process.  So for those of you who are legit terrified of the stock market due to lack of knowledge, I suggest you start with the stock market simulator on Investopedia.

Now go forth & get rich.