Frequently Asked Questions About Penny Stocks

1. What is a penny stock?

A penny stock is commonly defined as any stock that trades for under $5 per share.  Penny stocks can be traded on any market.  See below for a discussion on the different markets.  

2. What is a microcap stock?

As defined by the SEC, a microcap stock is a company with a low or "micro" capitalization (total value of the company's stock).

3. Are penny stocks risk free, or safe?

Absolutely not.  Anyone that tries to sell you an investment that could double or triple your money in a short period of time and tells you it is safe is lying.  Any investment that pays out at a much higher rate than treasury bills (the only investment considered truly risk free because its backed by the US Govt.) carries with it a risk premium allowing for the higher returns.

4. Does it make sense to buy stocks that are falling?

In my humble opinion, that makes no sense.  Sure, dollar cost averaging works sometimes, but rarely have I seen it work in a penny stock.  I believe that penny stocks move when they are being promoted.  Once a promotion stops, unless the stage of the company has changed (ie. Startup àGrowthàMaturityàDecline), or the company has hit some milestones or improved its balance sheet or income statement, it is difficult for a company to maintain its highest price.

5. What is scalping?

Scalping is the practice of selling stock into the market while encouraging others to buy it. No one associated with Penny Stock Jockey is allowed to trade the stock we profile until the profile is sent to paying subscribers.  Then we allow our associates to buy in the open market along with our subscribers - our interests are the same as yours - to make money.

6. Does Penny Stock Jockey or its principals, employees and consultants, own any profiled stock?

We differ from other sites that say their employees and principals will not trade the stock because, lets face it, if we've done all the work to pick out a winner, and if we're telling you it's a good buy, then why wouldn't we want in?

7. What are the differences in markets?

• Grey Market: Stocks traded here have no reporting requirements and can only be bought and sold through market makers involved with the particular company. There is no electronic or publicly market price dissemination for bids or asks. Definitely not something Penny Stock Jockey would look at.
• Pink Sheets: Stocks traded here have no reporting requirements, although many provide information voluntarily. Quotes are readily available and many the stock can be purchased from any number of brokers.
• Over the Counter Bulletin Board (OTCBB): Stocks traded here have are required to file audited financials and reports with the SEC. There are no minimum listing requirements. They generally offer greater transparency than pink sheet or grey market stocks. Penny Stock Jockey loves these stocks because of the reporting requirements and transparency.
• NASDAQ, AMEX, NYSE: These stocks generally are fully reporting and must meet certain listing requirement minimums in terms of assets, revenues and shareholders.

8. Are all penny stocks required to file reports with the SEC?

No.  A company must file reports with the SEC if:

• it has 500 or more investors and $10 million or more in assets; or
  
• it lists its securities on the following stock markets:
  
• American Stock Exchange
  
• Boston Stock Exchange
  
• Chicago Stock Exchange
  
• Cincinnati Stock Exchange
  
• International Securities Exchange
  
• Nasdaq Stock Market
  
• New York Stock Exchange
  
• Pacific Exchange
  
• Philadelphia Stock Exchange; or
  
• its securities are quoted on the OTCBB.

9. When valuing a stock, how important is price/earnings ratio?

In my opinion, price earnings will tell you the price of the stock relative to the market, but lets face it, markets change.  Its much more important to know intrinsic value for a long term hold position.  For a trading position, neither are that important...the promotion is much more relevant.

10. Can I buy stocks from Penny Stock Jockey?

No. We are not brokers, registered representatives or investment advisors.  To buy any profiled stock, you must open a brokerage account with a full service, discount or electronic brokerage firm.

11. How do I know when to buy or sell?

Penny Stock Jockey will alert you well in advance when to buy.  We cannot tell you when to sell since every investor's financial position is different, every risk profile is different.  Generally, if you've made enough money for you to be satisfied, you can't go wrong taking a profit.

12. Is Penny Stock Jockey a good place to start my research?

We're biased, so our answer is yes.  We are a great place to start.  Our philosophy has always been, bet the jockey, so we ensure that the penny stocks we're profiling are stocks that for the most part will be promoted.  And thats not a bad thing.  Penny stocks have no coverage and without promoters, would have no audience.  The world will not beat a path to your door if you build a better mouse trap, unless it knows you have the moustrap!

13. How do I get started?

Buying and selling penny stocks for profit starts with the proper investment philosophy and research.  Penny Stock Jockey provides both.  You'll benefit from the time we spend to scan hundreds of penny stocks to find the right one to buy now.  You'll benefit from the profile that will educate you on the company and industry in minutes rather than weeks.  And you'll sleep soundly knowing that a competent promoter is promoting the deal.