penny stocks to buy in a volatile market
TRANSCRIPT
Penny Stock Research
Penny Stocks To Buy
In A Volatile Market
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Hi, My name is Aaron and I‘m with Penny
Stock Research, today were reviewing our
recently published article…
Penny Stocks To Buy In A Volatile Market
Penny Stocks To Buy In A Volatile Market
For the first time in 2015, we’re dealing
with some real, sustained market
volatility. This isn’t your garden variety
volatility either. There has been real fear
among investors.
And it’s very obviously taken a toll on US
stocks. For instance, the S&P 500 has
dropped 7.5% over the last month, and is
10% below the 52-week high. The
benchmark stock index is also down
5.5% for the year.
So how about penny stocks? How have
they handled the selloff? Well, the
closest thing we have to a penny stock
indicator is the Russell 2000. It’s a
popular index made up of small cap
stocks.
As you may have guessed, the Russell
2000 has also sold off lately. Here’s a link
to the Russell 2000 fact sheet for those
interest in learning more.
However something has happened
during this selloff which is out of the
ordinary. In a surprising twist, the
Russell has actually outperformed the
S&P 500 this year! Here’s the chart:
The chart above is a direct comparison
between the S&P 500 (SPX) and the
Russell 2000 (RUT) overlaid on top of
each other. The SPX is in red and RUT is
in blue.
As you can see SPX clearly sold off more
sharply than RUT during the steep drop.
Moreover, the Russell 2000 has
recovered more than the S&P 500 so far.
The small cap index is down 4.9%, a full
half percent less than the SPX has
dropped.
So what does this tell us about penny
stocks?
Basically, this shows us that investors
were worried about the market in general
and not about individual stocks. More
likely, the selling was position/portfolio
based, and not based on industries or
sectors.
Moreover, it shows that value investors
are still seeking value stocks. Keep in
mind, penny stocks (due to how cheap
they are) are often targets for value
investors. Clearly, this is good news for
penny stock buyers like us.
So then, what are the best penny stocks
to buy in this kind of market?
Well, to understand what the best stocks
are to buy, we need to first understand
the problem. In other words, why did we
sell off to begin with?
In a nutshell, the reason is China.
Or more specifically, it’s due to the
implosion of the Chinese economy. You
see, China is the second largest
economy in the world. It’s been a
massive consumer of global goods,
especially raw materials.
There’s a reason why commodity prices
have collapsed lately – China’s demand
for them has slowed considerably. So the
first obvious point is to avoid raw
materials or commodity stocks.
Among penny stocks that includes gold
and precious metal miners and oil/gas
drillers. On the other hand, the US
economy is doing quite well.
US consumers are still spending money.
And the unemployment rate has dropped
substantially.
What’s that mean?
It means that US-based stocks, with
mostly US based customers, should be
fine moving forward. Among typical
penny stock companies, it would include
retail and tech companies.
There should be a fair amount of choices
out there if you do your research.
Remember, big selloffs can be excellent
opportunities to find good companies on
the cheap (particularly penny stocks).
Just make sure you do your research,
and don’t jump blindly into penny stock
investing without a plan. As always, if
you have a question about a stock or
investment idea, shoot us an email or
leave us a comment on the website.
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