Editor’s Note: As you might already know, our mission is to restore the lost art of smart speculation at Monument Traders Alliance.

Which is why in today’s guest article, Chief Income Strategist at The Oxford Club Marc Lichtenfeld is busting some myths about another speculative aspect of the market: penny stocks.

Over the course of his career, Marc has had tremendous success using options to play penny stocks. In fact, just in the past two months, he’s booked a 119% gain in 37 days and a 246% gain in 27 days.

After you read Marc’s five truths about penny stocks below, be sure to check out his Penny Options Summit, where he explains how to control shares of some of the world’s most profitable companies for pennies on the dollar.

Go here to join Marc’s Penny Options Summit.

– Ryan Fitzwater, Publisher

There are a lot of misconceptions about penny stocks…

Friends and family often ask me where they should put their money now.

I always answer, “Penny pot stocks…”

And then emphasize that I’m kidding.

But people do love themselves some penny stocks. Investors dream of buying a stock in the low single digits and watching it explode to double digits, making many times their money.

However, there are a lot of misconceptions about penny stocks…

So once and for all, I’m going to let you in on what is true and false about them.

Myth No. 1: Penny stocks have greater potential to double or triple than larger stocks do.

Investors believe it’s much easier for a $2 stock to become a $4 stock than it is for a stock trading at $100 to rise to $200.

Tell that to owners of Nvidia Corp (Nasdaq: NVDA)…

The stock traded at $227 in February 2023. It jumped past $700 less than a year later.

A stock’s price will have no effect on whether it can rise 10%, 20% or 100%. What matters is how much supply and demand there is for the stock.

If a small company makes a big announcement but no one is following it, it might be hard to drum up interest in the stock.

On the other hand, when an unknown company suddenly finds itself in the spotlight, the stock can rise incredibly fast. from $1 to more than $16 in one month like Houston American Energy did earlier this year.

Myth No. 2: All penny stocks are tiny companies with little revenue or profits.

There are quite a few energy companies whose stocks trade for under $5, such as Broadwind (Nasdaq: BWEN), which is profitable and growing. There are also companies like Destination XL Group (Nasdaq: DXLG), which also trades below $5 and generated more than $500 million in revenue last year.

Sirius XM Holdings (Nasdaq: SIRI) has an $18.5 billion market cap and generated more than $8.5 billion in revenue last year. It also trades for around $5.

Myth No. 3: Investing in penny stocks gets you in before Wall Street’s big players.

This is partially true.

Many mutual funds and other institutional investors have their own rules against buying stocks that trade below $10 or $5.

But many others do not have those restrictions. There are plenty of hedge funds and other institutional players that own penny stocks.

Myth No. 4: Penny stocks don’t pay dividends.

Most penny stocks don’t pay dividends because many are still young companies in their early growth phase.

But some do…

Sirius XM pays a dividend. So does Manhattan Bridge Capital (Nasdaq: LOAN), which trades for around $5 and pays a 9% yield.

Myth No. 5: All penny stocks are risky.

A lot of penny stocks are garbage companies. Many others are priced low for a reason.

But there are plenty of quality companies – businesses that are just beginning to gain some traction, undiscovered by Wall Street – that make for great investments or short-term trades.

If you trade penny stocks, make sure you understand the risks, the potential profit, why you’re making the trade you are and what strategies you have to limit your risk, such as trailing stops.

YOUR ACTION PLAN

Penny stocks can be lucrative as long as you know what’s true about them and what’s myth.

And if you want to learn more, I’m showing readers only the most profitable penny stocks as part of my new Penny Options Summit.

Here you’ll discover how to control shares of the world’s most profitable stocks for pennies on the dollar, and see mammoth returns as high as 400% or more in as little as 10 days.

Click here to join the Penny Options Summit today.

Good investing,

Marc

FUN FACT FRIDAY

Buffaloes Vote, Too: Turns out, humans aren’t the only species that exercise democracy. The African buffalo is one of the animals most well-known for using a voting tactic to make travel decisions.

African buffalo herds use a form of voting when trying to decide which direction to travel in. One at a time, adult females will stand up and look in a certain direction before sitting down. Whichever direction gets the most amount of looks is typically where the herd travels.

Interestingly, if the vote is divided, the herd will actually split up temporarily. Only the adult females are allowed a vote, regardless of social status within the herd.