Misconception #1: Penny stocks are priced low because they are poor performing companies.

Penny stocks are usually small and newly created companies. While still trying to get established, penny stocks are analogically infants and toddlers compared to large-cap adult companies. With great parental guidance from a superb managing team, penny stocks can hold a promising future.

Hints: Do your research! Get background information. There may not be an abundance of information on the company because of lack of media attention. So research patiently and vigilantly.

Check if the managing executives and board members are respectable and passionate towards the company. A positive staff is always going to produce great work and show that through the company’s bottom line.

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The Chance to Turn $5,000 Into $1.5–2 Million or MORE. . .

I’m sure you’ve heard this story before — but it’s a classic: One split-adjusted share of Microsoft (NASDAQ:MSFT) from its $21 IPO in March 1986 would be worth around $7,900 today.

Investors who put down just $5,000 in Microsoft in 1986 could have as much as $1.9 million today. What’s going to be the next visionary market move?

Find out here…

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Make sure the company is in a growth position and if they are compatible with future trends and markets. A company’s willingness and desire to expand is a good indication of the value of a company to potentially rise.

Another good way to analyze a company is by reviewing a company’s financial reports and accounting sheets. 10-K annual reports are a great source to attain information. Comparing and analyzing numbers throughout the years will show the “guts” of a company that you won’t read or hear about in the news. However this process can be challenging…

In compliance with SEC rules, companies have to report their financial records. Inside executives know that these records are easily accessible and can show the value and worth of the company. As a loophole, firms will try format the reports differently every year to make the evaluation more difficult and tedious to analyze.

Misconception #2: Penny stocks are all frauds.

Some investors have fallen victim to the “pump and dump” scheme – a system where spammers will buy a stock and then hype it up by sending out positive e-mails and internet ads causing the price of the stock to jump. While the price is up, spammers will sell at a net gain, causing the price to fall, leaving their victimized investors holding the bag.

Hints: Go back to the basics. One of the primary rules to investing… never… ever… invest on tips and rumors. Chances are, your source is wrong or you’ll get in too late…

Do your research! Make sure you know what you are investing in. Make sure your sources are honest and ethical and act upon the interests of its investors and clients. Tips are only ideas. Investments should only be made on your own personal conclusions.

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Misconception #3: Penny stocks will usually generate a net loss.

Every stock bares risk. Whether they are priced from $0.01 to $1,000, or a microcap or a large-cap company. Barriers to entry and competition are high these days… Since a majority of penny stocks are young and small companies, its common for penny stocks to default under a competitive market.

In fact, penny stocks are one of the fastest and easiest ways to make double or even triple your money. It’s a whole lot easier for a $2 stock to jump to $4 than a $60 to $120.

Hints: Do your research! Are you starting to see a pattern here? Make sure the industry sector of the company is compatible for future market trends. Analyze the company by generating different scenarios. For example… Would the company be affected by high oil prices? Is their innovative product going to be the high in demand? How would they perform in a recession?

Generally, the more risk you have, the higher the yields can be. If you enjoy risk and want to make big-time returns, by all means go ahead and invest irrationally. But if you are risk-adverse, go back to the basics and diversify your portfolio.

There you have it, three truths to investing…

These common misconceptions are the response to investor’s bitterness of poorly managed securities. For what it’s worth, that’s up to you. But with sufficient research and a promising future market, penny stocks can yield gains far greater than you could have imagined…

Source: Prejudices of Penny Stocks

Trading options is all based on anticipation. Yet with the volatility of the market, trading can be very frustrating with the market being unpredictable. There are several strategies and tips that you could practice that will increase your odds…

Here are 10 helpful tips that will contribute to minimizing risk and pull in huge profits when trading options:

10) Develop a game plan

How practical is this statement in life? You must always have a game plan when trading or investing. Otherwise, you’ll most likely trade irrationally and insensible and end up losing more than you had hoped. Developing a plan and strategy will have better odds than trading randomly. This should always be your first step to investing.

9) Select a good broker

Even with today’s easy access to a variety of resources, trading options are still very difficult to do on your own. Unless you’re a pro at trading, it would be to your best interest to select a brokerage firm for guidance. There is a plethora of different services out there offering different products. Shop around and learn their tract records. Make sure you choose one that’s compatible with your objectives and personal requirements. Remember, these are the people investing your money. Also, be aware of commission fees.

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Evaluate yourself

What are you trying to accomplish? How much money do you hope to make? How much can you take in losses before it affects your life? These are simple questions you should ask yourself when deciding to trade. Evaluating yourself will help you reduce of risk as well as help you plan your trading.

7) Know and understand the market

There are so many strategies and tactics when buying or selling options that you could trade in all market trends. Whether the market is bullish, bearish, or neutral, understand the trends and correlate it to your trading strategies.

Different markets will require different trading strategies. For example, you’re going to want to buy calls in a bullish market and sell calls in a bearish market.

News and press releases will have an impact on a stock price. Don’t buy from what sources are saying despite if they’re true. Chances are you’ll get in too late. Wait for a favorable price.

6) Separate and dilute your capital

There’s no other word more commonly used when preventing risk than diversification. This practice is so widely used in all investing practices. Like stocks, buy in several different sectors and equities to minimize risk.

Never trade with money needed for future obligations. Have a separate portion of your capital for trading options. The worst thing you would want is to lose your mortgage payment or retirement savings on one single sour trade.

5) Don’t get out early

You may have just had a few consecutive losses on several trades and you now have the mindset that all your trades will continue to negatively streak. Initially, you panic and tell yourself to get out to minimize your losses. That might be the worse thing you could do. If you get out too early, you could lose out on potential huge gains. In options, huge gains are what overcompensate any losses.

4) Don’t hold too long

Pay attention to the expiration date. Time value is one of the most important factors when trading options. Having the entire option expire and losing its value would be bad. Understand that options decay over time. If you feel it’s time to sell, sell. It’s better to take a small loss than losing everything.

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3) Secure your gains

Losing money right after you make it is a horrible feeling. With the volatility of the market, it’s easy to see a stock jump one week and then drop the next. If you don’t decide to sell after a stock is up in anticipation that it will continue to increase, a simple way to secure your gains is by setting up a trailing stop. A trailing stop is a stop whose price you raise as your profits grow. This will help you lock in any gains you make.

2) Establish a break-even point

A break-even point is the price at which the underlying instrument must shift by the expiration date, to produce an intrinsic value equal to the price you paid when you purchased the option. Defining a break-even point will ultimately help you tell whether the stock is worth selling or buying.

To find the break-even point, use the strike price and premium. If you’re buying a call, add the premium to the exercise price. If you’re buying a put, subtract the premium to the strike price. For example, if you were to buy a $40 put contract on Company XYZ for 5 1/2, the break-even point would be $34.50.

1) Research

This is a no brainer. Researching is the most useful and important thing to do when trading in anything. Pay attention to market trends. The best way to beat the market is to know the market. Great research is the key to consistent success in the market. Outside sources like your broker, news, TV etc. are great ways for information, but it all comes down to you. Your own personal information is more valuable than any other resource.

Options can be confusing and frustrating at times. Yet options can produce enormous gains. The collaboration of these 10 highlighted tips will help you increase your chances of making profits while minimizing risk when trading options.

Source: Ten Tips to Successful Options Trading

Well that’s something we’re willing to take a look at before making up our minds. Penny Sleuth’s Mark Louie has done some of the work for us. Take a look at what he’s come up with. Does this shake your opinion on ethanol?

Corn ethanol does nothing but bring the bushel price to an all-time high, vaguely put a dent into our energy demand, pollute lands with pesticides and drink up a limited water supply… Bottom line is, corn is a food, not a fuel.

Well there’s a new ethanol in town and by the looks of it, it’s here to stay…cellulosic ethanol.

This technology will ultimately help environmental problems, diminish the U.S.’s dependency on oil, boost the economy, increase food supply and even put an end to controversial wars…

Cellulosic ethanol, made from cellulose — the most common organic compound on earth — is potentially produced from your lawn trimmings, switchgrass, wood chops, paper sludge, corn stalk, stems and even manure and sewage.

Cellulosic ethanol differs from corn-based in so many ways. It’s by far much better in every aspect. The fact that it will be cheaper, more efficient, more abundant and environmentally cleaner than corn-based is enough to raise an eyebrow.

A Solution for America’s Oil Dependency

Studies have shown that the maximum amount of corn ethanol the U.S. could possibly produce without completely taking over the food supply is 15 billion gallons a year. That’s less than 10 percent of the crude oil America will use today.

The U.S. Departments of Agriculture and Energy did a joint study showing that the U.S. could grow 1.3 billion dry/tons of biomass while keeping forestry and agricultural lands sustainable. That could produce over 150 billion gallons of cellulosic ethanol, which has the energy equivalency to over 100 billion gallons of gasoline. That could drop total U.S. oil imports by over 80 percent.

With fuel-efficient cars and energy conscious attitudes, we can completely do away with all oil imports. We won’t have to worry about OPEC jacking up prices and protests in Venezuela anymore.

Cleaner Than Corn

For the 21st century, it appears “green” is the way to go. It just so happens that cellulosic ethanol is environmentally sound.
Cellulosic ethanol emits 85 percent less CO2 than gasoline while corn-based only emits 30 percent less than gasoline. It has actually proven to have net negative emissions because the plants would absorb more carbon than they emit when used as fuel. It also emits less sulfur.

The leading candidate for cellulosic ethanol, switchgrass, needs 75 percent less water, 70 percent less fertilizers and pesticides than corn. On top of that, switchgrass is a cheaper and more abundant resource.

Switchgrass yields twice as much ethanol per/acre than corn, has a short growth time and requires a lot less maintenance while lessening erosion. It also easily adapts to its environment and is very resistant to droughts and disease.

Switchgrass already has amazing benefits… It’s hard to imagine the capabilities of this plant will have once scientist start genetically altering the crop…

Following the Big Money

Switching to cellulosic ethanol will create thousands of domestic jobs and keep billions of dollars from jumping overseas for oil imports.

Currently, many U.S. farmers are struggling and relying on government subsidies for survival. Cellulosic production would increase rural incomes by 200 percent.

One economist estimated that cellulosic ethanol could increase the U.S. GDP (Gross Domestic Product) by $1.7 trillion from 2008-2022. With a majority of that money staying within the U.S., imagine the economic boom that we would witness…

The only draw back to cellulosic ethanol is that it’s not commercially mass-produced yet. Cellulosic ethanol is still in its developing stage…

To make the fuel, you first extract the cellulose through a heating process. Then, you break the cellulose down into sugar using enzymes. After that, you ferment the sugar into alcohol. Last, distill the alcohol into fuel. On paper, the process sounds simple, but there are some important screws that still need be tightening…Scientists have yet to find the most efficient and least expensive way to produce the fuel. The biggest problem is developing enzymes that could break down the cellulose rapidly on a large scale.

Currently, cellulosic ethanol can be made around $1.50-$2.50 per gallon depending on the process and type of material. There’s estimates that ethanol will be able to be mass-produced at less than $1 dollar a gallon.

There are several pilot-plants running and proving to be successful. Range Fuels is currently constructing the first commercial plant estimated to produce 20 million gallons/year.

The U.S. Government is also getting highly involved. The Energy Independence and Security Act of 2007 mandates heavy increases of ethanol. Some states are requiring ethanol-mixed gasoline.

The Renewable Fuel Standard Program headed by the U.S. government is requiring the production of 36 billion gallons per year of biofuels by 2022. Even if the U.S. reaches the maximum corn ethanol prodcution of 15 billion gallons, the majority of the quota will come from celluloic ethanol.

The European Union, and countries like Venezuala, Brazil, Columbia, India and China are all instituting similar programs…

Profiting from the Cellulosic Revolution

Unfortunately, the cellulosic industry is way too premature to predict the biggest gainers.

Whoever discovers the most efficient way to produce ethanol or whichever chemical/biochemical company finds the best enzymes will be a winner.

Venture capitalists own a majority of the current cellulosic companies…but at the magnitude and potential of the cellulosic industry, it’s likely we will see many of these companies go public. Those that already have are still small-caps. Here are a few out there right now:

Verenium Corp. (VRNM: NASDAQ)
SunOpta Inc. (STKL: NASDAQ)
Abengoa S.A. (ABG: MCE)
BlueFire Ethanol Fuels (BFRE.OB: OTC BB)

While these would provide you with a slight interest in cellulosic ethanol, we wouldn’t recommend any of them. This technology is still too premature.

Beyond these emerging ethanol companies, keep an eye on agriculture companies, chemical companies, equipment suppliers, transportation companies and even automobile companies that will be producing flex-engine cars that can run on ethanol.

Even industries such as cattle, meats, animal feed and various packaged food companies will all benefit because of much larger grain supplies.

When something has the potential to impact the world’s governments, environments and economies…it’s worth a look at…

Regards,
Mark Louie

Greg’s Endnote: For now, the ethanol debate is still just that, a debate. The reality is, most Americans still need traditional gas and oil for their automobiles. The problem is, it’s just too expensive. Oil is climbing toward $150 while gas is threatening to reach $6 by the end of the summer. And people still aren’t completely sure what’s causing the price hike. Well here’s an idea, and we don’t think it’s getting enough attention. Click here to find out the dangerous truth…

Source: Can the Corn