Lately, I’ve been really getting into stocks and trying to learn as much as I can about them. I was looking at American Apparel stocks and their stocks were priced at $0.22 per share! This company peeked my curiosity since I had gone to go buy some merchandise at their store just yesterday. I did some research and learned that they were considered “Penny stocks.”
Last week, I went up to the 12th floor to visit a processor to deal with specific case and I noticed he had his phone in front of his computer, watching the stock prices. All I could think of was… “Wow, people actually watch stocks all day? Can you really make that much money off of stocks? It’s like a second job.” Then I decided to wonder even more. “If American Apparel stocks were priced for that low and I bought 10,000 shares and the price jumped to $0.25 I could make some easy profit just like that!” I was sure it was not that simple though.
Nothing these days is that simple. There’s always a catch, there must be a catch. I know it’s the risk but there has to be many more processes involved otherwise everyone would be rich and making money off these cheap stocks.
As I returned back to my desk, I began to do my research. My brain was craving more information as I searched page by page, website to website. “Thank God for Google,” I thought while vigorously typing and clicking.
What I learned was this:
Stocks are usually considered “Penny Stocks” when they are priced below $5. You could technically make money off of these stocks though it is not really recommended. However, there are many risks associated with the low stock price. Low prices mean more risk and more risk means that the company is either a start-up company or it is on the verge of going bankrupt. You may take the risk though many of these type of companies rarely ever make profit nor do they last long.
I read somewhere else that American Apparel could be good for day trading since there’s a lot of market activity associated with this company; from the media, headlines, etc. But in the long run, it probably wouldn’t be a good investment unless you truly believe the company will reach a turn point.
Along the lines of stocks in general, not talking about penny stocks here, investing in Royal Dutch Shell (which the last time I checked at 4 pm was priced at $50 per share) may be a good idea according to Simon Black. They pay a 7% dividend yield which is not bad at all I must say. However, I need to learn the basics of stock investing before I decide to buy shares of this company. If you are planning on taking the Warren Buffet approach I suggest you keep this investment for the long run. Statistically, the average investor keeps their stocks for 6 months before selling them. Warren Buffet kept many of his stocks for over 20 years. Just to reiterate, if you really want to make money you have to think like Buffet and invest in shares as if you are the one who owns the company.
On a side note, please take note of Simon Black’s website, Sovereignman.com. It has many interesting articles that he posts that is a real eye opener. I heard about him today when he was featured in the Rich Dad Radio Show. The topic on today’s show was whether or not Americans are really free. There are so many ignorant people in the world today. Many have already predicted the end of the American Dollar sometime soon. I first heard about this predicament from Mike Maloney a few months back (his youtube videos about money & gold are worth watching, it’ll blow your mind!). They keep printing money and encouraging us to spend, making inflation go higher. We are all going into debt, spending money we don’t have. There is a stock market crash that is predicted to happen by 2016. The government is taking over and America does not seem to be a capitalist country anymore. People are threatened with imprisonment from stupid acts such as drinking unpasteurized milk from your own cow. You can actually go to prison for that… can you believe it? No comment.
Source: Sovereign Man
Anyways, I think I will stop writing now. That is the problem with blogs and why I can’t write blogs. I always feel like I have so much to say.
I highly recommend listening to the Rich Dad Radio Show. He covers many interesting aspects around the topic of money which I think everyone should know about. People are really missing out.
Ok, that is enough blogging. Sleep soon. Ta-ta !