What are penny stocks, and how can you make money investing in them? That is the question that Penny Stocks for Dummies sets out to answer. In this article, we give you a review of how well this expert introduction to the world of penny stocks answers those questions.
Penny Stocks for Dummies Overview
While the book’s name may make it seem like it is targeted primarily at new investors with little knowledge of penny stocks, it actually delves fairly deeply into the topic. Although the early chapters are focused on the basics of what penny stocks are and their advantages and disadvantages, most of the book is devoted to trading strategies and stock analysis. An area where the book excels is how seamlessly it transitions between the two. It is easy to start reading it as a complete novice and still easily follow the more technical sections later on in the book.
Penny Stocks for Dummies offers a very comprehensive overview of the penny stock market and is filled with directly applicable lessons. The book’s author Peter Leeds is actually one of the experts on penny stocks, with both extensive experience trading in them and a consulting business offering advice for both new and experienced penny stock investors. This practical layout makes the book very approachable, and by the time you are finished you will come away with knowledge that is directly applicable.
What We Learned
- The importance of making a strategy. Almost a third of the book is dedicated to teaching you how to develop a comprehensive stock trading strategy, and the author repeatedly stresses that going into penny stocks without one is almost certain to end in disaster.
- Penny stocks are not all the same. There is a huge variety in companies that issue penny stocks, with some on strong financial footing while others may be on the brink of disaster. Telling the two apart can be very difficult, and it is a topic that sees a lot of coverage in the book.
- The risks of investing in penny stocks. Unlike some other penny stock books, Penny Stocks for Dummies is very honest about just how risky investing in penny stocks is. He stresses that his advice is designed to mitigate that risk, but there is still a good chance of setbacks and failures even with a great strategy.
- How to avoid scams. Because they are not as heavily regulated as regular stocks, there is a lot of price manipulation and other nefarious activity in the penny stock world. One of the first lessons of the book is how to effectively spot them and not fall victim to them, which is key for any investor.
Strengths and Weaknesses
What We Liked
The author has a very enjoyable writing style that easily breaks down complicated concepts in ways that are easy to understand and follow. It rarely feels like information is just being dumped on you. The book also manages to cover the full range of topics on the subject, with few areas where you might feel you need to do further research with another book. It does not shy away from getting into some of the more complex aspects of company valuation, going beyond price history into examining business fundamentals.
Bonus read: Stock Investing for Dummies Book Review
What Could Have Been Better
The writing style, while very approachable, is not very concise. The author will frequently repeat the same thoughts or ideas several times using slightly different words. This is great for some of the more difficult concepts, but can make getting through parts of the book feel really sluggish. Similarly, the book will often point you back to earlier sections, which can also disturb the reading flow somewhat. This overall makes it a difficult book to read through quickly or in a few sittings, though it is not necessarily a negative when using it as a reference.
Penny Stocks for Dummies is an excellent primer for investing in penny stocks with a very practical bent. It is well-written, and focuses specifically on skills that will make you a better penny stock trader. While it can be a bit repetitive, it is a must-read for anyone considering investing in penny stocks. Have you read this book and tried some of its advice? Tell us how it worked!