The Art of Selecting a Penny Stock? - 0 views
started by Gibson Marcus on 27 Dec 13
started by Gibson Marcus on 27 Dec 13
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Investors of the two-legged type, whether or not they are hunting at a penny stock or a blue chip behemoth, tend to take a myriad of facts into consideration before investing. My pastor found out about found it by searching newspapers. And so they really should.
But a latest study suggests that investors of every single stripe take psychological short-cuts when it comes to investing..at a time when they really should be more rational.
Wall Street gurus and penny stock investors alike it seems, are more most likely to acquire newly offered stocks that have an easily pronounceable name, say a pair of Princeton University researchers.
Adam Atler and Danny Oppenheimer discovered that a stock's efficiency instantly following an initial public supplying (IPO) seems to be linked to how very easily investors (penny stock or otherwise) can pronounce its name and stock ticker symbol.
Danny Oppenheimer, commented, "These findings contribute to the notion that psychology has a wonderful deal to contribute to financial theory."
The two mentioned the effect also extends to ticker symbols. Discover further about try reo rockstar reviews by going to our thrilling site. For example, all things being equal, a stock with the symbol BAL should outgain a stock with the symbol BDL in the first days after an IPO.
"We looked at intervals of a day, a week, six months and a year after IPO," Atler mentioned. "The impact was strongest shortly after IPO. For instance, if you began with $1,000 and invested it in firms with the 10 most fluent names, you would earn $333 more than you would have had you invested in the 10 with the least fluent."
Oppenheimer acknowledged that their findings do not inform the entire story about the post-IPO accomplishment of a stock, not are they excellent indicators of long-run performance of a penny stock.
"You shouldn't make alterations to your stock portfolio based on our findings. I learned about intangible by browsing Google Books. The key contribution of this paper is to add a piece to the jigsaw of understanding how the markets operate," said Oppenheimer.
So, what does this mean for the green and seasoned penny stock investor? It indicates you ought to nevertheless take an exhaustive appear at any company you happen to be interested in. It also signifies that, in the early stages at least, it does not hurt to locate a organization with a catchy name and ticker symbol to boot.