Why? Because buying shares of a company is not the same as shopping at Wal-Mart. If you want to acheive financial security you need to start thinking like smart investors do. 99% of the time, the company’s stock is priced fairly for what the market sees as its value. The cheaper the stock, the higher the likely hood is that the company will go bankrupt and you’ll lose all your money. In 2009 companies like Sprint, Citigroup and yes even AIG looked tempting, but recall how it went from there. Control your emotions and think rationally about it. At one time, these once great companies were "on sale" but remember there is a reason for it all. I don’t want to invest my nest egg in companies like this. Chances are good that these companies will take a long time to recover. The same was true not too long ago. Companies like Cisco and Lucent were exploding to higher highs every day. Once a $100 stock 9 years ago, Cisco now trades around $20. Lucent was another superstar of it’s time, flying into the $70 per share range, only to fall to $1. Yes, $1! It rallied to $3 and was bought by another company. These companies never recovered which is not uncommon. They are called penny stocks for a reason. It’s because they are cheap and don’t have much value. Fund managers don’t bother with these stocks so you shouldn’t either. The government is pondering getting rid of the penny.. Maybe we should consider getting rid of our penny stocks too. How do you become rich? Not by betting on cheap stocks!
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AuthorJamie has an MBA from Rutgers University and a Professional Certificate in Real Estate Finance, Investment and Development from NYU. He's traded stocks since he was 13 and bought his first property within a year of graduating college. He also flipped properties and got out before the 2008 mortgage meltdown because he was able to see the market turning before it happened. He's started two companies and also has experience in investing in antiques, collectibles, gold, silver and trading futures. ArchivesCategories |