John Paul Whitefoot

The Nobel Prize & Penny Stocks



Posted: Tuesday, October 19, 2010

by John Paul Whitefoot
Penny Stock Insider

It's prize winning season! And the Nobel Prizes are first out of the docket. The Nobel Prizes are annual international awards given by Scandinavian committees in recognition of cultural and scientific advances. First awarded in 1901, prizes are given out in the fields of Physics, Chemistry, Physiology or Medicine, Literature, and Peace. This year, two Americans and a British-Cypriot economist won the 2010 Nobel economics prize for developing a theory that helps explain why many people can remain unemployed despite a large number of job vacancies.

Federal Reserve board nominee, Peter Diamond, was honored along with Dale Mortensen and Christopher Pissarides with the $1.5 million prize for their analysis of the obstacles that prevent buyers and sellers from efficiently pairing up in markets. Mr. Diamond - a former mentor to current Federal Reserve chairman Ben Bernanke - analyzed the foundations of so-called search markets, while Mr. Mortensen and Mr. Pissarides expanded the theory and applied it to the labor market. Their work sheds light on why the classical view of markets, in which prices are set so that buyers and sellers always find each other and all resources are fully utilized, doesn't always apply to the real world.

One example is the housing market, where buyers can struggle to find new homes even though there are a number of unsold properties available. Perhaps one could also apply it to the stock market and matching up great penny stocks with investors. Or rather, find out why some investors have difficulty finding excellent penny stocks. Are some penny stock investors looking to make triple digit gains in one day from garbage stocks? Or is it that due diligence is boring? Like the current job and real estate market, it's not as if penny stocks with great upside potential aren't out there. They are. The art is finding them. I'm not sure what metrics you use with your penny stock filter, but if you want to find great penny stocks with untapped upside potential, look for those companies trading at less than $5 per share with growing earnings, strong year over year revenue growth, good cash positions, and a low debt load. Check out a company's website. Is it up to date? Perception is as important as the information being presented. A corporate website that looks as though it was last updated 10 years ago doesn't bode well. Does your penny stock company release regular press releases? It may sound obvious, but press releases are important because they promote your penny stock. Not that all great penny stocks have regular press releases. But it does help them break away from the pack. And when it comes to penny stocks, good news and speculation can go a long way. Finding excellent penny stocks doesn't need to be a daunting task. You also shouldn't need a Ph.D in economics to find them. Though a Nobel Prize would look good on your resume.
John Whitefoot is a seasoned penny stock investor with a keen interest in international business and current affairs.  With many years of experience in the investment community, John Whitefoot is Sr. Editor at pennystocks.com and is devoted to uncovering the news, trends, and ideas that affect penny stocks on a daily basis.

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