Canadian Penny Stocks Blog » Investing

Should You Be Building A Portfolio Of Penny Stocks?

Canadian Penny Stocks — Tue, 20 Sep 2011 15:39:54 +0000

For most investors out there penny stocks are usually a long shot taking up a small percentage of their portfolios while there are others who are swinging for the fences and fully invested in the grandslam wealth creation approach. I’m not judging you on where you’re at; everyone has their own level of risk tolerance. But if you have any penny stocks at all, have you considered them as a portfolio?

The Portfolio Approach.
In a general investing sense you would be diversified, so why not do the same in penny stocks. It’s a great way to spread your risk across different industries, stages of companies, and timeframes.

All of the same rules for picking larger companies still apply to picking the smaller market cap ones too. There are a few more things to consider when you’re dealing with riskier decisions though, but a key investing tennet is diversification through portfolio building and as such it’s worth considering.

Need to learn more? Read about picking profitable penny stocks

Margin Account Investing: Profiting With Other Peopleâ€™s Money

Canadian Penny Stocks — Fri, 16 Sep 2011 12:39:12 +0000

Weâ€™re digging into the CPS archives to bring back a few posts that you might have missed. These archives are ones that have been particularly popular. Hope you enjoy.

Margin account investing is a great way to really amp up the earnings of your portfolio without actually having to put more of your own money in.Â You can borrow up to 70% of the value of an investing in a stock which means you only need to put up 30 cents on the dollar.Â Of course there is added risk that naturally comes along with added reward but if you’re interest is piqued read the following on Margin Accounts.

What Is A Margin Account?

Margin accounts are setup to allow clients to buy and sell stocks on credit and requires them to pay part of the full transaction price.Â The brokerage firm the client uses lends the remaining capital to the client and charges interest on the loan to the client.Â The client is expecting to make much more money than the interest charged out on it, and therefore a little interest is not a deterrent for the added service the firm provides.

The word margin itself refers to the amount of money that the client herself has to put up.Â The remaining amount is the loan provided by the brokerage firm.Â There are two types of margin positions that can be taken by an investor; long margin positions and short margin positions.

Margin Positions

A long margin position is when the investor buys a stock using only a portion of their own money and borrowing the remaining amount from the broker.Â There are specific levels of money that a brokerage firm is willing to loan out which is based on the selling price of the security.Â Each quarter there is a document produced that lists the stock eligible for reduced margin.Â These are generally stocks that have less risk and very liquid as such, they require you to only put up 30% of the total investment.Â The following is a list of those percentages:

Stock Price	Maximum Loan Value
Reduced Margin Stock	70% loan
$2.00 and above	50% loan
$1.75 to $1.99	40% loan
$1.50 to $1.74	20% loan
$1.49 and below	No loan

Taking a short position in a stock is selling a position in a stock that you don’t currently own.Â This type of transaction is executed on the belief that the price of a stock is going to fall.Â The terms of margin are the opposite when taking a short margin position because you are actually lending money to the brokerage firm because you technically sold a stock to them and they are paying you the proceeds.Â To cover the risk in this situation though the client must put up more than the total value of the short sale.Â The following is a list of the maximum loan values for short positions:

Stock Price	Maximum Loan Value
Reduced Margin Stock	130% loan
$2.00 and above	150% loan
$1.50 to $1.99	$3 per share
$0.25 to $1.49	200% loan
$0.24 and below	100% loan + $0.25 per share

Margin Call

When the margined stock is purchased the account must maintain sufficient funds to cover the position value. The brokerage firm lends you money but you are also provided with the stock so the full value of the investment is contained within your portfolio.Â However if the price of the stock goes down your investment total will be less than the loan amount.Â In this case a margin call will be triggered.

Example Of A Margin Call

Client A would like to buy 100 share of OPC.TO at $2.87
Total Cost of Shares	$287.00
Maximum Loan (50% * $2.87)	- $143.50
Total Margin	$143.50
…time passes and share drop to $1.83
Original Total Cost	$287.00
Revised Maximum Loan (40% * $1.83)	- $ 73.20
New Margin Requirement	$213.18
Original Margin Amount	- $143.50
Margin Call Amount	$ 70.30

In the example shown above you would need to fund the account with an additional $70.30 immediately or have the position liquidated automatically by the brokerage firm.Â That’s not something you want to have happen so it’s important to keep a good amount of money in your margin account and try not to come too close to the limits.

Using other peoples’ money to invest can lead to a rapid increase in profits but comes at an increased risk.Â When using leverage always take care ensuring that your account won’t come anywhere near a margin call.Â That type of situation could result in significant losses as the use of leverage amplifies the loss.Â Although many penny stocks don’t use margin, there are still some junior companies that would be eligible in the sub $5 range that could be traded in a margin account.

Would You Avoid Penny Stocks In Uncertain Times

Canadian Penny Stocks — Mon, 12 Sep 2011 13:29:53 +0000

This past summer has shown that markets can be very very volatile. Is doesn’t bode well for the Efficient Market hypothesis. There are a lot of professionals out there trying to figure out what everything is worth given all the economic news coming out from all corners of the globe, but at the end of it all they seem to get it wrong and things fluctuate wildly. That causes stomach ulcers for them and you.

So let’s talk about risk.

There are different kinds of risk when investing in the stock market. Some you can control and some you cannot. Investing in penny stocks is certainly a risky thing to do. However, as we’ve seen, investing in the overall market (index fund) can be fraught with risk as well.

In general small cap stocks are much riskier than a stable growing market, but in uncertain times they could present opportunities for growth where larger cap stocks are stock following the trend. This isn’t going to be a generalization, however many penny stocks are poorly corelated with index performance. So the overall market risk isn’t at play as much in a smaller cap company than the bigger ones with significant weightings in index funds.

Don’t get me wrong though penny stocks are risky! Their risk however would be evaluated differently than large cap companies.

#1 risk you can control is yourself and your money. You are the only one who determines the exposure you have to the market and individual stocks so your due diligence is always required!

Technorati Tags: Investing, penny stocks, risk

Sell In May And Go Away

Canadian Penny Stocks — Mon, 29 Aug 2011 10:12:03 +0000

There is a saying on Wall Street; sell in May and go away. While this is an old saying, it’s rarely one that is practiced by most investors. This would have been a good year to do just that. Taking a look at the charts and it’s clear that this seasonal effect was in full swing.

The corollary, if you will, to the adage is known as the Halloween indicator. Basically, the period between November and April have generally been outperforming compared with the rest of the year. While several studies had been conducted on determine whether this trend is something worthy of exploitation, they are largely inconclusive from the investors perspective, unless you choose to believe or disbelieve certain elements.

These types of waves are generally more from an overall market perspective whereas individual stock picking, especially with small cap companies is less reliant on seasonal patterns and more to do with the possibilities that exist within the company itself. My kind of investing.

It was also that way with the blog in a sense. As the author of the blog, I took some time off this summer from blogging to get married. I’m happy to report that all went well and we’re now happily married and had a lot of fun on the honeymoon as well. But we’re back in business now here at the Canadian Penny Stocks blog and happy to be so.

Looking forward to sharing more info and stocks with you all this fall. Continued success!

Internet Investing Readings

Canadian Penny Stocks — Thu, 23 Jun 2011 00:50:03 +0000

A few interesting reads around the internet today. Ocassionally on the Canadian Penny Stocks blog there will be a post of some readings elsewhere on the internet. Some are directly about penny stocks, investing, and money, while others might be a little off topic but hope to strike some interest for you.

Investopedia has an article on The Dark Side of Bulk Buying which is not necessarily about investing but it’s about where you money goes if you’re not investing it.

Adam Hewison explains why diversification doesn’t work in today’s stock market environment. It’s a compelling case considering the performance of indexes the past few years.

Here is a Bloomberg article discussing IMF credibility based on an audit. There’s politics at work at the IMF no doubt. “The policy conclusions from International Monetary Fund research donâ€™t always follow the underlying analysis, thereby potentially harming the institutionâ€™s reputation, according to an internal audit.” Read on…

Maybe some day Financial Advisors will be more than salespeople. Rob Carrick talks about it in an interesting article: Financial advice business needs to grow up.

The Sino-Forest story is fascinating in that mysterious kind of way. Of course for investors it’s been more of a horror show. The Blunt Bean counter has a suggestion for those paying the price on unvetted media coverage.

Technorati Tags: canadian stocks, finance, news

Tech stock among the biggest movers

Canadian Penny Stocks — Fri, 17 Jun 2011 01:27:05 +0000

Today’s markets were shaky as they continue to figure out the value and fallout from the Greek bailout and the jobless situation in the US. There’s certainly a flight to safety going on right now that has seen money flow out of equities and into US $ and treasuries. This has also had an impact on the Canadian Dollar as well driving it ever closer to parity. The CAD/USD trade may only be a short term trend until the market figures out what is happening with America and Greece. When the appetite for risk returns it’s conceivable that we will see another rise in the Canadian dollar. Of course this isn’t a forex blog!

One of the small cap stocks we’ve followed this year continues to have market interest and is a big mover volume wise on the TSX-V. Intertainment (INT.V) had a significant run up at the beginning of the year and has since retreated to lower levels now trading in the $0.60 range. Their product Ortsbo is the one to watch.

Ortsbo announced that its world famous real time translation application is moving to cloud to support viral growth. Built on the Microsoft Windows Azure platform, Ortsboâ€™s new HTML alpha platform will allow the users to connect initially to Facebook, MSN and Google GTalk. Other social networks will be implemented quickly on the new platform, the company said in a press release. source: TMCnet

Technorati Tags: canadian penny stocks, Investing, technology

Penny Stock Profile: Lakeside Steel

Canadian Penny Stocks — Wed, 15 Jun 2011 20:32:34 +0000

Lakeside Steel is an oil and gas play however they are what many savvy investors look at are the ones making money regardless of the profitability of the companies trying to discover the stuff. They are in the oil and gas services industry. They are manufacturing pipe and mechanical tubing products. Currently they are based in Ontario but are looking at expanding south of the border. Setting up a sales office in Houston is one step in part of their strategy to expand in the oil and gas services industry in the US.

Here are two videos that you might find interesting and will give you a background into what their company is all about and give you a sense of the overall strategy they have to grow their company and returns to the shareholders.

The second video is a CEO clip from Lakeside Steel CEO Ron Bedard.

From a technical analysis perspective the company appears to have hit a double top which is traditionally seen as a reversal and indeed in this case they have come off the highs in the $0.60 range and are now trading at $0.44. There is considerable support at the $0.38 level, so that will be something to watch out for in the future as the price does continue downward.

Fundamentally speaking, if you’re a long term investor you will be eagerly anticipating the full production commencing this fall. For more information on the company visit their website.

Technorati Tags: canadian penny stocks, oil, Technical Analysis

Is This One To Watch?

Canadian Penny Stocks — Tue, 14 Jun 2011 01:47:11 +0000

Silverquest Resources is a company that’s had some buzz as of late. It’s time for me to get down to business and doing some research on this Canadian penny stock. They’re working in the Yukon and are the 4th largest landholder. Here’s a youtube video that you may find interesting on getting started.

SQI is a Canadian penny stock that is certainly tied to the price of silver and gold since that is their primary objective, but given that there is a new gold rush going on in the Yukon, they would be in a position to benefit from this if the source is found.

To learn more about this small cap stock, check out their website.

Technorati Tags: canadian penny stocks, Gold, Investing, mining, silver

Have You Checked Out Picking Profitable Penny Stocks Yet?

Canadian Penny Stocks — Thu, 02 Jun 2011 15:46:48 +0000

The Picking Profitable Penny Stocks course has been out for a little while now. Have you checked it out yet? Head to InvestingCoursesOnline.com right away if you haven’t and see what we’re going on about. It’s really tremendous value for money.

If you’re already on the road to penny stock success and you’re just checking out the Canadian Penny Stocks blog for some penny stock ideas, that’s great and we’re going to continue to build on the successes of the past and keep bringing the free goods here.

But if you want more, check out the course. It covers a lot more material in detail than this blog. The course covers things like:
- When to sell profit, when to sell losses
- Researching Management
- Researching Cycles
- Managing Your Profits and Losses
- How to handle penny stock promoters
- Are penny stock newsletters worth it?
- Understanding volumes in Penny stocks
- When to use limit orders and market orders
- How I find penny stocks

The material is what you need for learning more about investing in penny stocks. The community you’ll join will further your successes and finally, the launch price really can’t be beat.

If you haven’t already, take a minute and CLICK HERE to check it out.

Technorati Tags: canadian penny stocks, Investing

Is Diversification Broken?

Canadian Penny Stocks — Wed, 01 Jun 2011 01:42:31 +0000

One of the most common phrases we hear in investing is that of diversification. It’s usually known as the only free lunch in investing, but there’s a lot more to it than that. In today’s economy is diversification still the answer?

Now you can learn from a 10 page report that exposes the myth of diversification and how it can cripple your financial future if you do it the Wall Street way. In this in-depth report on diversification, you will learn how one simple adjustment can easily open up the money spigots and turn the tables on Bay Street and Wall Street. This one simple adjustment can put your account in the black faster than you can go to the Canadian Penny Stocks website.

What Is The Cost?

If you do nothing and donâ€™t download the special report, what could it cost you in losses in your portfolio over the next few months? However, if you call or click on the link, the report is free of charge along with a â€œGlobal Strategy Portfolio.â€

It’s a different approach to investing than specifically focusing on penny stocks, but an informed investor is the successful investor. Think of it as another weapon at your disposal.

Click HERE to get your report immediately!

Technorati Tags: diversification, Investing, stocks