In the past few weeks, the stock market has been declining and the volatility increasing, but this could be an advantage point for fund managers whom hold penny stocks or micro cap companies. Micro cap funds and capital firms also stand to benefit from a declining stock market.
Venture Capital firms engaged in the business of loaning money to penny stock companies are in a dream position when the market plummets. These funds and firms usually purchase large blocks of stocks from companies and sell them on the public market. So how does a declining market help these firms, we the company gets cheaper. An investor with 100k has more buying power when the market is cheaper. Penny stocks decline and rebound at times in double percentage points. This can allow a 100 Million dollar company to turn into a 90 Million dollar company in one trading day or a 1 Million dollar company to a 900k dollar company. Venture firms whom do not trade out of their position and hold smaller companies can buy a larger percentage of the company with market declines.
The recession is the perfect time for funds, firms, and even individuals to take a large stake in a public company. Please remember, penny stocks are extremely risky, please read our disclaimer, and only invest money you are willing to lose, because you just might. Also, be selective, do not buy on the price alone. As Buffet has said, "It's not a stock market, it's a market of stocks."
The advice of PennyStockCentral is to wait on the company that you know is a great company, and when the market cap is around a dollar figure you can swallow, take action. Companies that are traded over the counter are a perfect example of high volatility companies that may come within the reach of a smaller investor. As far as funds are concerned, OTC companies can achieve low levels enough so that fund managers may be able to buy a majority interest, thus taking a long position in a penny stock, something that was un common just up to a few decades ago.
Please read and do due diligence on any venture you are thinking to undertake.
Success
The Penny Stock Central Team