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I cringe whenever I hear a novice investor tell me they do not buy cheap stocks because they offer higher earnings potential. A phase I hear is “I want to buy $ 1 and $ 2 stocks because they can easily double and I’ll make a profit of 100%.”

My reaction is always to give these people know that “stocks are priced low in September as stocks have high price there for a reason.”

As in any life, the quality has never been offered a discount. When I have a machine on the market, I will not buy a Mercedes Pinto. No pun Pinto car owners, because I have only one example.

Inventories are valued at current market value or perceived value according to current situations. A stock trading $ 1.00 at this level because it is only in the eyes of investors. A stock price of $ 50 or $ 100 trades at these levels because of lower prices with no quality stock. Institutions such as trusts, will not buy a stock at $ 1 on the basis of strict rules and internal guidelines for financing. Stocks on move large amounts of aid agencies who have the purchasing power to drive prices to 100%, 200% or more within 12 months.

A quick review of market history shows that the majority of stocks priced at $ 2 or less will be delisted or bankrupt before they give an investor a return to three digits. high quality stocks are generally representative of high quality companies that generally have innovative products or services that are more income and profits of this fact in mind institutional interest. I saw more stocks double or triple from $ 20 – $ 50 range than any other price over the last five years.

Stock goes to 25% in a month’s time is the same regardless of the $ 5 and $ 6.25, $ 60 or $ 75. It happens every year. For the inexperienced investor is usually reluctant to buy the stock price is 50 dollars or more, because it seems too expensive for the untrained eye. What is expensive ignorant investor can be a good investor and polite.

Always buy the shares which has the highest probability of success based on fundamental and technical analysis. The price should never question nor the lot size.factoring An increase of 25% will always be the same if you buy a stock for $ 2 with 5000 units or shares for $ 100 with 100 shares.

I agree that the chances of a quick profit of 25% of a population of 5 million seems to be superior to a gain of 25% for a deposit of $ 100, but is also much greater for a 25% slide in stock $ 5 for the shares of $ 100. Their protection is limited to the floor with a low share price as it can act quickly and present a position that stocks of high quality liquid can.

Here is a simple example:

If you buy a stock for $ 2 and it is $ 1 for two months, you now have a gain of 50%. But if the stock goes down $ 1 in two weeks, you now have a huge loss of 50% of your portfolio, a figure that destroyed most of the shop owners.

If you buy a stock is $ 60 and $ 30 for two months, you’ll gain 50%. Now if the stock starts to decline rapidly and is now at $ 10 for a few days, you still have a chance to sell the stock at less than 10% of your purchase price, and prevent further loss and damage to your portfolio. You the investor may be able to identify the negative action or a red flag and get out fairly quickly, without the sharp fall of 50% at the lower price of the stock may disconcert you.

Do not buy stocks based on low prices or the number of shares. Always buy a quality oriented technicals and fundamental images, and the price and volume of activity. research archives and look at the number of stocks that have opted for a huge benefit for $ 20, $ 30 and $ 40 + level.

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