Given the high volatility of these stocks, what tactic should I use in order to maximize my EXPECTED RETURN? I am voting you up because this is a legitimate question with a correct possible answer.

Yes, you shouldn't buy penny stocks, yes you shouldn't speculate, yes people will be jealous that you have money to burn. There are several definitions of return and the correct one will determine the correct answer. So we will not assume you want to take this money and reinvest the remains until you are dead.

This rules out 2. It sounds like you are the sole beneficiary of this fund and that your value proposition is regardless of asset class and competition to other investment opportunities. This rules out 3. Now there is already evidence that penny stocks are a losing proposition. In fact, some people have been successful in setting up honeypot email accounts and waiting for penny stock spam But that's boring, let's ignore it. Diversification will affect the correlation and overall risk Kelly Criterion of your portfolio -- but it has no effect on your expected return.

In summary, diversification has zero effect on your expected return and is not justified by the cost. You might have better odds at a casino.

There's a grey area where investing and speculating cross. For others, not enough action.

Say you have chosen 10 penny stocks, done your diligence, to the extent possible, and from a few dozen this is the 10 you like. You'll find that 3 might go up nicely, 3 will flounder around, and 4 will go under. The gambler mentality is if one takes off, you have a profit.

How To Sell Penny Stock On Scottrade

After the crash of '08, buying both GM and Ford at crazy prices actually worked, GM stockholders getting nothing, but Ford surviving and now 7X what I bought it for. I've never invested in penny stocks. My 1 investing rule, buy what you know and use.

People get burned because they hear about the next big thing, go invest! The reason for this, as others have mentioned, is that commissions eat up just about all your profits. My opinion, don't put it in a bond, returns are garbage right now - however they are "safe".

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Sell it right away: The nice thing is that you can wait it out. I try to put a 3 month time frame on things I buy to make money. Once you start getting a more sizable chunk of money to play around with you should start to diversify. Keep at it and best of luck!

These stocks have no value to them, are just waiting for paper work to liquefy and vanish.

The other gamblers are bots waiting for some sucker to buy so they can sell right away. So maybe a fresh new penny stock that hasn't been botted yet gives some higher chance of success, but you probably need to be a bot to sell it quickly enough. All in all not that much different from buying regular stocks Thank you for your interest in this question. Because it has attracted low-quality or spam answers that had to be removed, posting an answer now requires 10 reputation on this site the association bonus does not count.

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Zipote 1 2 3. Put on reds, I tell you! This is a legitimate question and relevant to this community. Penny stocks are a gamble. The only way to maximize your return is to be lucky. I always put it on black, that's the safer bet. It is optimized by The Kelly Criterion and it deathly afraid of going bust since in the long run one bust makes everything else irrelevant. This is the correct choice for choosing the best portfolio manager when different levels of risk are available.

A great bond fund is better than a shitty equity fund, even though it is expected to return less. You are left with 1, expected value. Full Decent 1, 6 Disagree is a difference of opinion. Expected value is calculated geometrically. Arithmetic means have no place in finance. Also, the stock market version of Kelly must be used. In general use arithmetic mean for superposing possibilities at the same time point and geom mean for combining results across time. I hope all of my competition does math that way.

And if you are just speculating or gambling, then don't worry about risk. It's like taking 10 home run swings. Chances are you'll have 10 strikes. But if you connect on one, it could go a long way. How many different stocks would you want to invest in, so that if you do hit a home run, it makes up for all the strikes? Steven Leggett 2. I've done that repeatedly, from what I've found, panic selling is pretty much a blip that you need to be comfortable in over the long term.

If you sell you're guaranteed to loose money now.

If I have $ to invest in penny stocks online, should I diversify risk and invest in many of them or should I invest in just in one? - Personal Finance & Money Stack Exchange

If you wait, you chance it coming back to your original goal. Then you'd lose your money, which is why you diversify. The reason is that everything you buy will take a dip at some point.

If you sell it as soon as that happens, you'll be selling at the bottom of a temporary dip a lot more often than you're selling at the start of a long slide.

You cannot time the market , you don't have the analysis tools. Unless you do of course, in which case go ahead with your technical analysis: SteveJessop - yes, because this is the strategy Steven Leggett has shared in his answer. And I would question someone making consistent gains when they are taking a small profit at a time for each trade but are willing to take a big loss to achieve it, which could wipe out all your small gains in one go.

I fail to spot where the OP asked for general investing advice. The question was specifically about penny stock speculation. You flat-out admit that you've never even attempted to invest in penny stocks, and there isn't sufficient context in the question to justify the recommendations here, regardless of whether or not they work for you or others.

I just don't see the relevance of any of this. I am modding up for the funny and the insight, although this should have probably been a comment to the original question.

In it, you'll get: The week's top questions and answers Important community announcements Questions that need answers. This is a great answer, very well justified.

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