In the internet age most people depend on Google as their sole source of information. While search engines are certainly the most convenient source, they are not always the most accurate or most complete source when it comes to obscure information, like the information you’ll need to achieve greater success trading penny stocks online.
You will have to put in a little extra leg work to find any valuable information on penny stocks; especially the ones that choose not to list with the SEC at all. If you don’t do adequate research to find accurate information you may as well be gambling with your investment dollars. I hear Vegas is nice this time of year.
Start with the SEC
The place to get some baseline information is with the Security and Exchange Commission (SEC). If the company is filing with the SEC at least they are attempting to look legit. The information provided to the SEC is submitted electronically through the EDGAR database system. Since there is such a large amount of information provided for thousands of companies every year, the only auditing that really occurs is a simple electronic screening process for obvious discrepancies.
Call Your State Securities Office
Each state has a securities regulator. While the federal security regulators may not have caught wind of any issues with either the company or the people who are the primary investors or management, a specific state may have. When people are caught in scams they will often file a complaint, and often this complain never leaves the state level. You should also contact the state where the company originated so you can see complaints and charges during the company’s start up period.
Go To Your Local Business School Or Public Library
Some databases on companies are simply too expensive for the average investor to purchase and keep maintained. Many large libraries and business schools do maintain this information. Often business schools have their students write dissertations on small companies to evaluate their decisions and track their records. These papers become open to the public at state universities. Finding one of these papers or this database information may clear up any concerns you have about investing in a specific penny stock.
From Trade Communities
While companies may not be interested in the average investors understanding of the company, they may put extra effort into their supply chains or other trade resources. Companies need the support of the industry to survive or thrive. No outsider knows the inner workings of a company as well as its employees or its suppliers. If the company depends on a lot of electronic components find the local technical organization where you may meet some of the suppliers. If the company depends on a lot of union workers you can speak with the trade unions on their dealings with the penny stock company.
Speak With The Company Itself
Remember, these penny stocks are not very large. Any investor who is willing to take the time to consider a serious investment has a good chance of getting a sit down with at least an investor relations person. Often these companies aren’t large enough to have an investors relations department so an upper manager will take time with you. If the company cares enough about investors to talk with you that’s a positive sign right there. Companies that are struggling or engaged in some sort of penny stock fraud want as little face time with others as possible. Often you can get more detailed information from a chat and a tour than all the professional prepared financial reports.
Why Put All The Effort Into This?
The point of investing in penny stocks is to find the big hitter in the sea of average and dangerous investments. Whether you are searching for penny stock fortunes or a way to make a little extra money, by better screening out bad stocks you reduce your risk of being hit unexpectedly and you increase your chances of success in this market.