Penny Stocks are the flavour of the day. Where should you focus?

 20^th January 2022

Penny Stocks are the flavour of the day. Where should you focus?

Dear Fellow Travellers, 

Namaste! The last 4 posts were dedicated to personal growth. Personal growth is a personal choice. Those who want to join masses will be able to grow at an average rate, while for those who want to grow individually, the sky is the limit. 

Last weekend I was talking to an investor and he was talking about finding Penny stocks and investing in them. He likes the CHEAP stocks and everything CHEAP is a good buy for him. He has divided stocks into two categories - CHEAP stocks – i.e. below Rs.5/- and Costly Stocks – i.e. above 100/-. He is happy to buy stocks below 5/-. 

I come across so many theories every now and then and I could see the BACK OF THE ENVELOP calculations of such investors. I understand their PSYCHOLOGY of investing in this kind of shares. 

In marketing PARLANCE – these shares prices can be called as PRICE POINT. PRICE POINT is a price where the demand for a SHARE is likely to be higher.  Many guys have this kind of mentality and they invest or waste their time in finding such cheap price companies. 

Why CHEAP shares? 

Most guys in India have come a long way from poverty to middle class and middle class to newly rich class. 

They have seen their forefathers and fathers struggling for a few rupees. They have been taught about FRUGALITY / SAVING MONEY / BARGAINING from EARLY AGE. Their total focus is on PRICE. The lesser they pay, the happier they feel. 

If the price is low – they are ready to buy anything and everything, whether they need it or not. Have you observed – people buy things in SALE, even if, they don’t need them? 

The things, which they really need and if the prices are not in their comfort levels – they will not BUY or STRETCH themselves a little!! 

When they come to the share market – they find it difficult to forget those mental tendencies. 

What is the RIGHT WAY to DECIDE PRICE POINT IN the SHARE MARKET? 

Share Price in the Market is a combination of various factors. The two most important factors are EARNING GROWTH of that company and at what multiples (P/E ratio in market parlance) it is available. P/E ratio gives an indication of VALUE to the PRICE you pay. 

We focus on these two aspects along with other qualitative aspects before deciding whether the price is high or not. 

What have been our experiences? 

Reading our posts, I keep on getting tons of inquiries for our services. We have come across one common question to start with – what are our FEES? Those who follow the MASSES – they take their decision to work with me or not based on the FEES only. The REBEL in the masses sees the VALUE we give them and other value-added services we provide them FREE of cost. These REBEL when they follow our inputs just for 3 years – gets over with their MONEY RELATED worries for the lifetime. Since we provide holistic guidance – we give inputs for their health/relationships along with their wealth. They live happily ever after. 

Have you seen PENNY STOCK BILLIONAIRES? 

I have not come across any billionaires who had become billionaires by investing in PENNY stocks. Yes, Billionaires do buy some penny stocks for fun. 

Look at the MASSES – who are wasting tons of time on BARGAIN HUNTING or CHECKING VARIOUS online marketplaces for the CHEAP prices – they remain in MASSES only. They die as common people only. 

What is the WARREN BUFFETT way? 

He has bought tons of companies in his lifetime. He looks at all the factors. Even if the price and other factors are right – he will take the decision to buy or not, based on only one factor – the HONESTY of the CEO or the OWNER. 

He knows – the business will go up or go down based on various factors. But if the top guy is honest, the business will do well in the long term. 

What NEXT? 

I have transformed my life and my follower’s life based on the TRIPOT of TRANSPARENCY, TRACK RECORD, and TRUST. Think beyond PRICE in all your endeavours and take your life and wealth to the next levels. 

I wish you all the Best.

Follow me on Twitter @hiteshmparikh Or on Whatsapp - +91-9869425399.

Learn a Lesson. Live with Passion & Invest with Reason.

Hitesh Parikh.