==== ====For More Information, Please Go to:http://tinyurl.com/72x37mb==== ====I heard a great story about Warren Buffett recently. One day Warren was riding in theelevator at his office in Omaha. A few other people got on the elevator as well. In themiddle of the floor was a shinny penny. Everyone had a chance to pick it up, but nobodydid. Finally after a few seconds Warren reaches down and picks it up. He looked atit for a moment then slipped the penny into his pocket.Rumor has it, he said "the start of my next billion" as he put the penny in his pocket.I dont know if the storys true or not, but it sounds like something he would do. We all havedreams of turning pennies into millions (or billions in Warrens case). Some people have aknack for making money out of almost anything.In the stock market, theres a high risk, high reward way to make lots of money. Investing in Penny Stocks.Now before you question my sanity let me ask you a question? Have you ever tradedpenny stocks? Do you even know what a penny stock is?There are hundreds of definitions for a penny stock. Some investors think veryliterally. Only stocks that trade for pennies a share are penny stocks. The USGovernment defines penny stocks a little more liberally. Heres the quote right from the SECwebsite:The term "penny stock" generally refers to low-priced (below $5), speculative securities of verysmall companies. While penny stocks generally are quoted over-the-counter, such as onthe OTC Bulletin Board or in the Pink-Sheets, they may also trade on securities exchanges,including foreign securities exchanges. In addition, penny stocks include the securities ofcertain private companies with no active trading market.Look, forget all that legalese and government mumbo jumbo.For me a penny stock is a publicly traded company whose entire market value (their market cap) isvery small. See, stocks are classified according to their size. Large cap stocks areworth more than $50 billion. Mid cap stocks are worth $10 to $50 billion. Small capstocks are worth $1 to $10 billion. And micro-cap stocks or penny stocks are worth from$50 million to $1 billion.How do you classify companies worth less than $50 million . . . I call them hobbies!
Seriously, if youre able to invest heavily in one of these micro-cap penny stocks just as it starts togrow, you can make some serious money.Do you want an example?About a year ago I was doing some research on the coal industry. If you dont know, coalsone of the biggest sources of energy for the United States. Some people have evencrowned it "King Coal" and called the US the Saudi Arabia of coal.To say we have lots of the stuff is an understatement.While I was doing some research I came across a very interesting company, James River Coal(JRCC). The company was founded in 1988 and produces coal for sale to electric utilitiesand industrial consumers. They have 6 mining complexes, 26 underground and surface mines,and 10 preparation plants. All told the company has more than 265 million tons of provenand probable coal reserves.Not bad for a little company that in August of 2007 was selling for less than $5 a share.James River Coal was a penny stock. The entire company was worth less that $125 milliondollars.Coal prices however were starting to go up and up and up. And do you know what went upand up and up along with prices? Thats right, the stock prices of all the coalcompanies. Not just James River Coal but some of the big players too. Companieslike Arch Coal (ACI) and Massey Energy (MEE) watched as their stock climbed.So how can you make money trading these penny stocks?The stock for JRCC was stuck below $5 for months and traded below $10 for almost half ayear. You could have bought all you wanted.Then as oil prices and coal prices started to climb the stock just took off. In less than a yearthe stock skyrocketed from penny stock status to more than $60 a share. You read thatright . . . more than $60 a share.JRCC returned more than 1,100% in less than a year!Now youll notice the stocks recently fallen in price. Thats no doubt due to many investorstaking their huge profits off the table. Despite this recent correction, the stocks still up morethan 500%.Now you see how investing in penny stocks can be so valuable?Dont forget, like anything, investing in a penny stock does have some risk. Make sure to doyour due diligence and discuss with your broker all the risks and potential rewards of penny stockinvesting.
Brian Mikes is the editor of the Dynamic Wealth Report, a free investment newsletter that offersinvestment ideas and news you cant get from the mainstream investment press. Brian and histeam bring decades of Wall Street and Silicon Valley experience to help you discover profitabletrading ideas you can use today.In addition to penny stock trade ideas, youll also receive FREE updates on penny stocks, options,ETFs, commodities and currencies that offer the best opportunity for immediate profit. Click hereto start your free subscription today: http://www.DynamicWealthReport.com/new.htmArticle Source:http://EzineArticles.com/?expert=Brian_T_Mikes==== ====For More Information, Please Go to:http://tinyurl.com/72x37mb==== ====