Chapter 3: Your Broker Set Up - The Problem
The problem with this type of broker is quite obvious. You will not know first hand where the stockbrokers loyalty lies. Therefore, will he sell you a stock that is not doing well? Does he know a stock you own will be doing better in the future and therefore wants to sell it to you? Of course we can not say for sure that a stockbroker will do this or even that he will not. The bottom line is, though, if you are in the business of penny stock investing, you need to know whos behind you.
Many penny stocks are traded in the way of principal stock brokers. Although this does not necessarily have to be a bad thing, it is important to know that it could potentially be there. There may be a conflict of interest in the way of the stock broker and you should know about it before hand.
This area of the penny stock market needs to be dealt with carefully.
Information About Penny Stocks
You may not realize it but there is no doubt that these stocks are very risky business and may or may not show you some details of that risk right in the track record it has left behind for you.
In most cases, penny stocks are purchased with a broker dealer type of situation. If they do not have good customer relations, how well will your stock actually go up? So, now it is your turn. He is paid a commission for working for you here. Remember, just because a penny stock company is brand new does not mean that it is not worthwhile. You really need to be able to understand each difference here.
|