THOUGHT FOR TUESDAY 17 JUNE 2008
From top share author MALCOLM STACEY
Hello Crazy Fans,
You have to understand this. Otherwise, you might go mad with impatience. Doing penny shares is a bit like doing the pools.
You have a go, you wait. You musn't expect to score straight away. You may do. But it's very rare.
Penny shares are like doing the pools because the rewards can be very big. Or they can be small, or somewhere in between. Just like pools wins.
But you need patience. The usual track of a penny share, according to my experience, is that it falls away just after you buy it. The decay is slow, because not much happens to it.
And when nobody buys or sells, the natural outcome is that the value falls slowly. It falls because the market makers strive to rouse some interest.
They want the share price to eventually seem like a bargain so that the buying starts. After the buying comes the price rise. After that comes the profit-taking and so the share begins its slow dribble backwards again.
My policy is to hang onto penny shares, even during the falls. Nor do I sell when the share has a modest improvment.
What I wait for, or more accurately, hope for, is the big piece of news that will cause the share to double in a day - or even as much as ten times in a week.
Such bonanzas happen to me from time to time. But it's very rare. Never mind, it happens enough to rejuvenate my penny share portfolio two or three times in a year. This makes the whole excercise worthwhile.
Because the thing to remember about penny shares is that you can only lose 100% of your stake. But the gains are theoretically limitless. Now there's a thought. As we all rock on.
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