Penny Shares

[Booldawg]

Has anyone had experience of investing in these? I might 'dabble' but need to read up on it first as I have no experience in this area.

I'll set up a bank account with a set amount of money in (say 100 GBP) and use this capital as an initial investment. If I lose it then I lose it - its a gamble but I wont be tempted to put more capital in.

What sites can you use to buy/trade penny shares and get advice on good investments?

[factor-fiction]

Penny shares are not really any different to any other shares in my view.
If you have £100 you can buy 2000 shares @5p, or 100 shares @ £1 or 1 share @ £100.... or anything in between.
If the price of a share doubles you double your money. If it halves you lose your money.
The only difference I can see is that price changes may be more dramatic in percentage terms for penny shares so your gains or loses may be greater

[VHG]

Note that share buying is not for short term "profit" but for long term investing.

Share prices can go up and down a lot, but over time do tend to go up.

However you need to ride the "up and down" storms and stick with them for years to see a profit.

No point selling them the minute anything goes wrong or you lose your money.

[dzug2]

With £100 dealing costs are going to eat up a considerable part of your investment, regardless of any profit/loss

You really need several £K to start to make shares of any sort worthwhile

[Booldawg]

thanks all, yes dzug with further investigation I've been reading about broker costs

[TheShakeperian]

Banks used to buy and sell shares for customers, you just had to tell them what to buy or sell , no advice given but the service was free or at a small fee.

[TheShakeperian]

Plent of free advice on line , then just use your bank to do the transactions.
http://www.pennystocksshares.co.uk/

[factor-fiction]

I'm not aware of banks offering a free dealing service. I haven't bought any for a while but 10-15 years ago I think a good rate was £10 - 15 per transaction. Even if it were still only £15 that's a fair chunk of the £100 - and then there will be fees when you come to sell.
And of course there is always a spread between the buying and selling prices.
So, for an outlay of £100 I think you'd need a massive increase in the share prices before you'd make any money

[dr b]

factor30 is quite right; by far the biggest cost in these shares is the difference between bid and offer prices. I own some shares in a penny stock (as noted, this is gambling money only). On a recent day the bid was 50 cents, the offer $2. Meaning that if you wanted to buy you'd pay $2, if you wanted to sell you'd get 50 cents. Most trades actually occur inside these quotes but the swings can be dramatic; last week the stock went from $2.10 to $1.45 to $1.25 in the space of three trades (obviously someone was selling).

However, the true "value" of the company will only be realized in the long run (I'm hoping they get acquired for $10/share some day in the distant future) so darting in and out of the stocks on a daily or weekly basis, once you add in brokerage costs and tax consequences, is not likely to be a money-maker.

[dzug2]

The other thing to consider is that penny shares are particularly prone to scams - people talking up the price with false rumours, dumping their shareholding and running when it slumps.

[HowardKennitby]

There are many magazines devoted to finance and share dealing. You could look at a few of these for info. Some specialise in penny shares and attempt to predict the next big mover.

Howie

[dr b]

More fun with penny shares: the stock I mentioned above has traded 3 times today (it can often go 3 weeks without trading, so today is crazy - 4500 shares in total have traded! - compared to Microsoft's 31 million.)

So the three trade prices were: 2.04, 0.75, 1.31. All "noise", no "signal."

[james412]

Here's where I do my trading.

http://www.jpjshare.com/content/index.aspx