Reading Penny Stock Market Data

You can greatly improve your chances of making money from penny stocks by learning to read stock market data. The stock market gets input from a lot of sources. Understanding the different factors that influence the market, the companies and their stock prices is an invaluable skill for every microcap stock trader.

 

Listen to current economic trends to know which area of the economy is or will experience growth. Watch the direction of government spending and even foreign investment. Now compare the information you have with current performance of stocks in the market. You will notice a relationship between this information and the industries that are up and those that are down. Good stock traders profit from keen observation of factors that influence the market.

 

Start with a small list of about ten stocks to study and analyze until you become better. You can get a list from, msn, yahoo or Google finance. Research these companies in-depth. Watch out for the companies that are looking stronger than others in their sectors. Check out earnings per share ratio. Read the company’s financials; annual or quarterly reports. Check the trading volume. Trading volume is an indication of how liquid a stock is. The higher the volume, the easier it will be to sell after you buy.

 

There are different types of penny stock charts. All you need is to know the subject of the chart to have a basic understanding of it. Some charts measure daily moving average of a penny stock whiles others just show the price. Watch out for the following:

  • The support level is the lowest price of the stock at different intervals over a given period.
  • The resistance level is the highest price the stock maintains even when demand is high.

 

These two make up the penny stocks trading range in the period of time. A stock with a high volume of trade rarely falls below the support level and is a good penny stock to buy. Trend lines on the charts can also show you future price movement of the stock.

 

For more details you can consult with the experts at Paradigm Capital Management. With a long history of small cap investing and micro cap funds, Paradigm Capital Management employs a disciplined, bottom-up approach with an emphasis on fundamental analysis and extensive management contact.

 

Our three decades of experience provide an exceptional level of insight that is reflected in our high-conviction portfolios.

Call us 212.364.1830

 

Read also: Penny Stocks to Leverage Your Investment Portfolio

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Reasons To Own Small Cap Value

If you want to earn the best returns on your stock portfolio, you need to own small capitalization (less than 2 billion), value oriented stocks. Here are the reasons by our experts at Paradigm Capital Management:

 

1) They Outperform Every Other Class of Stock. Period.

 

Ibbotson Associates analyzed data from 1926 to 1997 and concluded that small cap value stocks outperformed the general market by 4.3% annually – more than any other class of stocks. Vanguard published data that showed, from 1927-2004, small cap value outperformed large cap value, blended, and growth portfolios. A Fama and French study shows this class outperforms all others in recessionary periods as well. Another study by Fund Evaluation Group shows that small cap value has outperformed every other group, and by a wide margin.

If we want the best returns for our portfolios, we have to invest in the best performing class of stocks.

 

2) The Market’s Valuation of Small Cap Stocks Is Inefficient

 

Stock analysts overwhelmingly cover large, well known companies. Their clients prefer to be in stocks of companies they know, and the investment firms they work for are forced to purchase large cap stocks so as not to exceed statutes by owning too much of a firm. When funds are operating with billions of dollars of assets, it doesn’t make sense to invest in small companies – any investment returns from these will not materially affect the fund’s performance because the position is too small.

 

One of the best books ever written on investing, Peter Lynch’s One Up On Wall Street, explains this phenomena well. Lynch earned stellar returns running Fidelity’s Magellan fund by buying hundreds upon hundreds of small positions in promising small cap stocks and holding them until the market realized their value.

 

Small cap stocks are valued inefficiently because of the lack of research on them, leading to misunderstanding of a company’s business or prospects. Add to this the general investment community’s unwillingness to invest in small caps, and you have a perfectly inefficient market for them, leading to bargains.

If we want the best returns for our portfolios, we have to take advantage of inefficiencies in the system.

 

3) Small Caps Can Become Big Caps

 

This one is obvious – you’re not going to find the next Microsoft or Wal-Mart by investing in Microsoft and Wal-Mart. When Microsoft started trading on the NASDAQ in 1986, it’s market capitalization was about 700 million. Today, it’s worth 260 billion – giving you back your initial investment 370 times over (and that’s not including dividends!).

 

Relating to point #2, once small cap stocks grow to a certain size, institutions and mutual funds can safely invest in them without worrying about statutory regulations or problems of scale. This leads to an influx of institutional money, sending stock prices up even farther. As market cap grows, these stocks get added to various indexes, which leads to investment by index funds that track them.

 

Small caps by their very nature have more and larger avenues of growth than large capitalization stocks. This, plus the intricacies of the financial markets, give them several advantageous characteristics for share price appreciation.

 

If we want the best returns for our portfolios, we need to own the best opportunities for revenue and earnings growth.

 

4) Small Caps Are Attractive Buyout Bait

 

Large companies are always struggling to deliver growth to their shareholders. Adding meaningful growth to a company with billions of dollars in revenues and earnings is not easily done. These large companies are often bureaucratic nightmares, slow to adapt with new trends and not nimble enough to stay ahead of changing markets.

 

Instead of taking the time, patience, and effort to develop new businesses, these cash rich mega-corporations often turn to acquisition as a quick fix for growth. Also, private equity groups will often buy these companies to restructure and then take them public again, reaping a big windfall. Buying small companies, even at a significant premium to market price, is often a drop in the bucket that delivers new opportunities in an instant.

 

5) Warren Buffett Says So

 

No less an authority than Warren Buffett himself has guaranteed that he could earn 50% annual returns investing sums of around 1 million. How would he do this?

 

“…look for small securities in your area of competence where you can understand the business”

 

If we want the best returns for our portfolios, we’d be wise to listen to the world’s greatest investor!

 

If you need any help then consult with the experts at Paradigm Capital Management – a trusted small cap investing company. We at Paradigm Capital are focused on a single minded purpose: To ensure that our clients have the best information on which to base intelligent financial decisions in pursuit of superior investment performance.

For more details, visit here: http://www.paradigmcapital.com/

Identifying Hot Penny Stocks

When covering the stock market the financial news networks tend to focus on the stocks traded on the major stock exchanges, like the New York Stock Exchange, the NASDQ, The London Stock Exchange and the Japanese Nikkei. For many investors, these traditional stocks, and the heft brokerage fees and the long waiting time in order to see a profit are not appealing. These investors, the ones seeking bigger risks with the possibility of bigger, more immediate rewards are trading penny stocks. Since the mainstream financial media is not generally covering the hot penny stock market, investors often decide which hot stocks to pick on their own.

 

One way to identify which hot penny stocks you should pick is to follow the national stock trends. Instead of investing in traditional blue chip companies, look for second or third tier companies, startups, and companies that have some liquidity, equity, or debt challenges. These companies should feel the trickledown effect of a bull market in their particular industry. So, instead of investing in Starbucks, you may find a regional coffee shop that offer hot stocks and an opportunity to get in on the ground floor.

 

There are a number of websites dedicated to identifying hot penny stocks. These sites offer their daily, weekly, and monthly hot picks. These sites may also offer you an opportunity to talk to successful stock investors via instant chat, email, or discussion forum. Instead of turning to a traditional broker for advice and counsel, you can chat, in real time, with other investors about which hot stock to pick. You can chart their successes and progress to see if they are as successful as they claim to be.

 

These stocks are not subjected to the same rigorous filing, listing, and regulatory standards as traditional stocks, so finding unbiased research about a company’s assets, liability, profit, and debt, can be challenging. Most analysts recommend that you conduct some of your own research on your hot penny stock choices. At the very least, you will want to look at a company’s business models, and recent profit and loss statements to get a picture of the overall financial health of the company. Sites like Google Finance and Yahoo Finance are good places to start your search for unbiased research on your hot stock picks.

 

Deciding which hot penny stocks to pick is equal part research, intuition, and networking. By participating in the conversation with other penny stock investors, you have developed an important network of advisers and you can watch how successful their penny stocks picks are. These chat rooms, message boards, and discussion forums illustrate if these investors are putting their money where their mouth is. As with any stock portfolio, timing is key, so keep your eye on your stocks movement. Since penny stock investors tend to trade in higher volumes than traditional investors, even moderate gains and losses can add up quickly. Picking hot penny stocks is an option for an nontraditional investor who is looking for a quick, big risk, bigger rewards scenario.

 

If you are looking for the expert advice to proceed with your investment goals, consult with the experts at Paradigm Capital Management. The firm is a trusted leader in penny cap investing and employs a disciplined, bottom-up approach with an emphasis on fundamental analysis and extensive management contact.

If you want to read more, please visit here: http://www.paradigmcapital.com/

Having A Diversified Penny Stock Portfolio

One of the best things about penny stocks is that you can build a massive portfolio without having a ton of money, so money really is no excuse.

 

If you are going to be a short term trader, jumping in and out of the market several times a day, then you probably don’t need to worry about building a portfolio. You are more of a scalper.

 

But for those who are more long term, in their thinking, you can build a solid portfolio of small cap stocks with just a few thousand dollars. All you have to do is start looking at all the different industries that are on the market, and pick some of the best small cap stocks within each of the industries.

 

For example, you can start with penny stocks in the alternative energy field, as there are A LOT of small cap stocks in that industry. Look at the financials on each of these stocks. Does it look stable? Have they been growing consistently year after year? These are just some of the questions you have to be asking yourself.

 

Just do that for all of the industries and you’ll have yourself a very diversified portfolio. So even though one of your cheap stocks may completely crash, you’ll be diversified enough with your other stocks, so that you it won’t damage your overall net worth. This way, you can build your account slowly and steadily.

 

For more info consult with our experts at Paradigm Capital Management a small cap company. With a long history of small cap investing and micro cap funds, Paradigm Capital Management employs a disciplined, bottom-up approach with an emphasis on fundamental analysis and extensive management contact.

We have the experts when it comes to Small Cap Investment and we can definitely assist you with your financial goal, contact us at (518) 431-3500
OR visit us here: http://paradigmcapital.com/

Penny Stocks – Are They Worth the Trouble?

Penny stocks, which are also referred to as micro-cap stocks, are defined by a number of factors, which include their price, as well as their market capitalization. Most investors will seek a stock that is undervalued and inexpensive relative to its price earnings potential, and micro-cap stocks have many such stocks with prices that are under a dollar. Additionally, these up and coming companies typically have market capitalization of less than 50 million dollars. This wonderful area of the equity market can provide investors the opportunity to achieve returns on their capital of 200% or 300% within a very short time frame, with risks that are commensurate with the returns. Therefore, an investor needs to understand how to trade these gems when the opportunity arises.

Micro-cap stocks are traded on a number of exchanges, which include the OTC-BB (Over-the-Counter Bulletin Board), the NASDAQ, as well as on Pink Sheets (.pk). The exchange traded micro-cap stocks are companies that are regulated by the SEC (Securities Exchange Commission) and are obligated to provide a complete and comprehensive financial overview of the company’s performance to its shareholders in the form of quarterly financial statements and an Annual Report that conforms to SEC reporting guidelines.

Over-the-Counter stocks include any regulated, publicly traded stock that does not trade on a national exchange. The strict requirements imposed on public companies are advantageous to most investors. Instead of having to guess the condition of a financial corporation, all the investor needs to do is look up their latest financial statement (10Q). The difference between the OTC-BB market and the national exchanges is that OTC companies do not have the same listing standards, such as minimum price for listings. To the diligent or well informed stock trader, this opens up opportunities to locate these undervalued companies. But there are pitfalls and mine fields.

Pink sheet stocks are an area of the equity markets where the companies that are traded are unregulated and do not have to conform to the same types of financial reporting as exchange traded or OTC-BB equities. These companies do not have to file an annual report or quarterly financial statements. For numerous reasons, the companies in this area of the market have decided that they would rather not report their specific financial results to a regulated group, but that does not mean an investor cannot find out how well these companies are performing or what’s in their pipeline. An investor can call a company directly or subscribe to a reputable penny stock research firm to find out the financials of a pink sheet traded company.

All types of micro-cap stocks are traded through market makers, who are professional traders that make prices in which they will purchase and sell a stock. Market makers exist in all size stocks, but their importance is more prominent when the volume of a stock is relatively low. The price at which a market maker will purchase and sell a stock will be different and this difference is called the bid (the price where a market maker will buy a stock) and the offer (the price where a market maker will sell a stock) spread. In many cases the spread between the bid and offer will be tight, but there will also be many cases where a bid/offer spread will be wide (large). For some penny stocks, a bid offer could be 50% to 100% of the value of the stock. For example, if a market maker quoted a stock with a bid at 10 cents and an offer at 30 cents, the spread of 20 cents is 66% of the price in which an investor could purchase the stock. To eventually sell the stock, the bid would have to move up 200% for the investor to break even. This is a key pitfall for an investor to avoid when trading penny stocks.

As indicated, one way investors and day traders can assist themselves in the process of learning how to trade penny stocks is to research and become associated with a capable micro-cap research firm. Not only will this type of company provide an investor with robust companies that are interesting and undervalued, but they will also steer investors away from companies that have wide bid offer spreads. Research firms can provide the financials of pink sheet and OTC-BB firms which can be difficult to find, excellent analytical tools, and provide a framework for the investment process.

Generally, before making a recommendation of a hot stock pick, they will have also dug into the company’s “back story”, and will publish that news to their subscribers, often on an exclusive basis. This early access and heavy lifting associated with researching of a micro-cap stock can take an enormous amount of time if performed without the services of a diligent research firm with top analysts crunching the data. In fact, the best research firms will send reaal time email and SMS instant messaging alerts that will notify their subscribers of companies that are fundamentally or technically undervalued which have reached very attractive entry points. A specialist firm will also refer a reputable broker that can execute trades for you in a fair and efficient manner.

Penny stocks can provide investors with unlimited returns and numerous challenges, and the process can be extremely rewarding if due diligence in the process is performed properly.

With a long history of small-cap investing, Paradigm Capital Management is a trusted leader in small cap investing. The Paradigm Micro-Cap Fund (PVIVX) offers focused, carefully selected exposure to the smallest segment of the U.S. equity market. These small companies are often overlooked by Wall Street and other mutual funds, yet they offer high return potential. It is an asset class that demands specialized expertise, and the managers of the Paradigm Micro-Cap Fund have been dedicated to this subset of the market since 1972.

 

To learn more about how Paradigm Capital Management’s capabilities align with your long-term goals, please contact at (518) 431-3500

Penny Stock Investment Fraud

You could have invested in the so called penny stocks in the past. It’s important for you to be conscious of the drawbacks of these investments, so you can protect yourself as an investor. Many new stock market investors make the error of making an investment in thinking that they’ll be ready to make a quick return. However, in truth, you may finish up losing giant amounts of money, as these kinds of securities are simply manipulated and likewise all sorts of frauds can happen. Though, not each penny stock can be thought as fraudulent, the possibilities of you having a difficulty due to a misconception are terribly high with small caps.

 

The most important technique of crime is by disinformation. It is very tough to get info about these stocks, as these securities are no longer bound by the data laws and rules that apply to standard growth stocks that are found in the New York Stock Exchange. Hence, you haven’t any method of knowing if these investments will be able to earn income, since you will not have any trustworthy history to research on.

 

Additionally, you will not be informed about any top management changes or any top level calls as these firms don’t have to tell the general public. So , you will not have the essential info that will help you to make the correct call about these securities. You can not find info about their total fiscal assets, and their money return proportions and quotients.

 

They are subject to manipulation and in several cases; the middle management of these firms will use fake and manipulative media coverage from local Television stations, radios and other media outlets. You will watch these interviews and you may think that these small caps will be in a position to show great performance. Therefore , you may finish up purchasing numerous penny stocks only to see that you have lost a large amount of money.

 

E-mail spamming is the most typical crime methodology that these firms use. Millions of spam e-mail messages are sent to a lot of investors in the hope that many of them will fraudulently believe that these stocks will gain in price. In plenty of cases, these kinds of spam e-mail methods are employed, so the price control of these micro caps happens. When a lot of stock holders inquire about a certain small cap, then coincidentally the costs will go up because of the illusion of demand.

 

In several cases, the costs of these investments are manipulated and when you’re making an attempt to sell your shares, you can quickly see the volume of trade is awfully thin.

 

This could make you have frozen assets, since you may not be in a position to sell your shares due to low demand. Therefore , you’ll be compelled to sell your penny stocks with a low price and the manipulators will buy your shares at even a lower price from you. Often these sorts of activities are employed by black market dealers to wash filthy and illegal cash.

 

Paradigm Capital Management provides you with the best stock picks and stock analysis. Paradigm Capital is a trusted leader in small cap investing. With a long history of small-cap investing, Paradigm Capital employs a disciplined, bottom-up approach with an emphasis on fundamental analysis and extensive management contact.
Also read: Associate with Paradigm Capital Management for Mutual Fund Distribution

Small Cap Stocks – Informed Predictions

The ocean of the stock market is big enough for everyone interested in it to fish for a living. However, each person has their own attitude and appetite for the kind of fish that they would like to catch. While there are certainly big fish available in the ocean of stock trading, you need to invest heavily in your equipment to get them on board in order to make a roaring profit. And there is no certainty that you will make a profit given the huge investments that you have to shell out. However, small cap stocks may be just the right size fish you are looking for. You might find a lot more fish, and you might not have to invest a fortune in equipment. If you want to make handsome profits in the stock market without having to invest a whole lot of money, small cap stocks are right for you.

 

As you would expect, investing in big companies requires big dollars, while small cap stocks will help you along the path to success with a smaller initial investment. Typically these small cap stocks, also referred to as “penny stocks,” tend to be popular for many investors on account of their trading at $5 or less. The low price per share brings in a lot of affordability amidst the volatility and uncertainty of the market. Small cap stocks are in companies that have limited market capitalization and may have tremendous growth potential – the smaller you are, the larger your possibility to grow.

 

There is a catch when it comes to Small Cap Stocks. You should have the expertise to understand how they will react and respond to developments within the company, the industry, and the economy as a whole. Small cap stocks are more volatile and tend to be more speculative than the rest of the stock market. It takes time, close attention, knowledge, and informed predictions to appreciate the way small cap stocks behave in the medium to long run.

 

Paradigm Capital Management is a trusted small cap company. With a long history of small-cap investing, the company employs a disciplined, bottom-up approach with an emphasis on fundamental analysis and extensive management contact.

We have the experts when it comes to penny stock investment and we can definitely assist you with your financial goal, contact us at (518) 431-3500
Or visit us here: http://paradigmcapital.com/

Understanding and Evaluating Penny Stock Patterns

Penny stock charts contain stock patterns. These stock patterns help investors evaluate the trend in the company’s share prices, and are especially useful in predicting future behavior.

It is imperative to monitor and check, on a daily basis, the prices and volume charts of the penny stocks that you intend to buy and trade. You will be surprised to discover how frequently a stock trading pattern repeats itself. Studying price and volume charts that go back as far as three years ago may show vital patterns.

 

Familiarizing yourself with the way penny stocks have been traded in the past may be beneficial as well, as this will give you a good feel of the way the stock might move in the near future. A guarantee of a pattern repeating itself is not 100% sure, but it does happen, and when it does it may mean instant profit for your investment.

 

By using a penny stocks trading software for screening and analysis of graphs and charts that shows day to day or week by week trading activity, you may be able to recognize any re-occurring stock trading patterns. Seeing a trading pattern from two or three years ago repeating itself at present, is not an unusual occurrence.

 

How to evaluate penny stock chart patterns

 

1. Verify the focus of the penny stocks chart. Some charts firmly track the prices of the stocks while other charts indicate the average movement of a penny stock. If you don’t understand the chart’s topic, you will need to do research to be able to identify what the chart is evaluating.

 

2. Delineate the support and resistance level for the penny stock. The support level is the lowest chart point at which a stock price fell on numerous occasions during a specific time span. The consumer’s demand for the penny stocks will not permit the price to fall down below the support level. On the other hand, the resistance level is the high point on a stock chart where the price surpasses demand.

 

3. Familiarize yourself with the trading range for the penny stock chart pattern. A trading range is a price range at which the value of a penny stock remains inactive for an extensive period of time. Once the stock chart pattern goes beyond the highest point of this range, it may possibly set a new resistance level. Conversely, if it goes lower than the bottom of the price range, it is possible that the penny stock is on its way to establishing a new support level.

 

4. Look out for any trend lines within the penny stocks chart patterns. Trend lines may possibly designate the future prices of the penny stocks. If the trend line is going upward, it may be a sign of future growth, while decline on the other hand might signify the opposite. It is also imperative to establish a comparison trend line as it will help determine if stocks are following the market and would have nothing to do with future price indicators.

 

Paradigm Capital Management is a trusted small cap company. With a long history of small-cap investing, the company employs a disciplined, bottom-up approach with an emphasis on fundamental analysis and extensive management contact.

We have the experts when it comes to penny stock investment and we can definitely assist you with your financial goal, contact us at (518) 431-3500