My Financial Advisor Tells Me to Stay Away from Penny Stocks

Penny StocksIt is a scenario that is played out many times across the country. You are an enterprising investor and hear about a penny stock through someone. You do some online research on the penny stock and realize it has a competitive product in an emerging marketplace. Rather excitedly you call up your financial advisor and tell him to research the numbers on the company. Your advisor pulls up the penny stock ticker, disappointedly tells you that it is a speculative stock with low volume, and that he has seen many an investor burn their accounts chasing hot stocks.
End of conversation? No. Your financial advisor advises you that if you are interested in the micro cap stocks he can allocate a small portion of your money to a micro cap index ETF or such actively managed mutual fund which has very low returns in comparison to the triple digit gain you were seeking by catching a penny stock's exponential growth before it attains institutional status. You never look at that intriguing opportunity again and for all you know it quadrupled since you considered it.
What you probably do not realize is that retail financial advisory firms are directly or indirectly part of investment banking and research firms that only follow larger stocks because that is where they generate the most significant part of their revenues. Besides, if your financial advisor is charging you annual fees based on your account value, what is his motivation to rock the boat by researching an opportunity that could make your money ten-fold? And what kind of a business model would it be when he or she has to actually do some research on your behalf?
Despite the sarcasm, there is absolutely nothing wrong with your financial advisor shunning your attraction to a penny stock for in reality that same stock could fold before you know it. (In all fairness, though, it is okay for large cap stocks like General Motors and Fannie Mae to fold, but not smaller stocks in which you would have probably made a smaller investment?)
It is not the job of your financial advisor to make stupendous growth on your money. In order to seek such opportunities you have to go farther than Wall Street and seek the micro cap newsletters that abound online. It is the daily work of these researchers and writers to uncover hot stocks before they get recognized by Wall Street. There are many such sites that regularly bring their subscribers small cap and micro cap stock opportunities, along with requisite email stock alerts to let you know when they are exiting or reducing a stock position. For a good example of such website you can visit www.hypergrowthstock.com which has consistently delivered high gains by concentrating on penny stocks. Do not tell your financial advisor about it.

First Name :Francis
Last Name :Mailhot
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