Finally, you must be able to evaluate the capitalization and cash flow of the company. If you find the right company, you must be able to hold the investment for years to allow the company to mature and for the stock to appreciate in value. Furthermore, you must have sufficient capital to be able to withstand total loss of your investment. Investment in emerging companies is always a high-risk investment. Finally, there is simply an element of luck in any stock investment.
Luck plays an even greater role in a market in which manipulation is so prevalent.
Some legitimate companies have had their stocks manipulated to such an extent that they were forced out of business. Even without manipulation, the success or failure of a fledgling business is simply unpredictable. Sources of information Your broker can be a tremendous help in evaluating an investment. However, in the penny stock area, there are many unscrupulous brokers whose only goal is to sell. Be sure that the advice you receive is balanced and addresses your investment needs.