Penny Stocks To Buy In A Volatile Market

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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