It’s a simple question. Is now a good time for penny stocks? There’s a lot of crazy things happening in the world and there’s enough volatility in the stock market in general so are penny stocks worth the extra risk?

This isn’t a normal time and rest assured that while some people lost a lot of cash during the Japan fallout, other investors made out like bandits. I don’t want to get in to any moral objections to this behaviour. We can save that for another time.

The stock market itself has been considered a good investment in the long term. The short term volatility should really been seen as opportunities to take action on inefficient pricing of stocks during times where valuations are too difficult to calculate given the news of the day. Penny stocks however are always going to be a high risk investment.

Does that mean we take a miss at penny stocks?
Then there wouldn’t be much need for this blog. The reality is that penny stocks provide an opportunity that is too good to miss if you have the risk tolerance to be invested in them. The proof is pretty simple. We take the top 5 performing stocks on the TSX (over $5.00) and the top 5 performing stocks on the Venture exchange and compare their % return over the past year.

TSX stocks over $5:
CNL.T 561%
FR.T 488%
SWI.T 426%
SBB.T 353%
HZU.T 291%

Compared with the penny stocks from the venture exchange
PHM.V 14,900%
BAT.V 2,850%
ORT-A.V 2,275%
RGD.V 1,680%
NEE.V 1,660%

You can’t win them all, bit one win can go a long way with a successful penny stock.

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