Here I will tell you the basics of how to begin researching penny stock brokers. You need to have some basic data on each penny stock broker before you make a decision. Every person’s situation may be different, so I can not just tell you one simple place to go for your stock brokerage needs.

A penny stock broker is basically just like any other broker with one caveat: they allow or are willing to execute penny stock trades. Some brokers simply do not want engage in the penny stocks. Some will execute penny stock trades for you, but at a greater expense than standard trades. Some will help you trade penny stocks but only if you trade in large volumes. Some provide discounts for higher volume trades and those discounts are almost necessary as trading otherwise are prohibitive.

There are some basics you should look for when considering penny stock brokers.

What minimum balance do they require and can you keep that balance comfortably? Does the broker have an annual fee? Are there conditions which might lead to annual fees (such as being an inactive trader for a period of time, like a month)?

How much do they charge per order, and specifically how much do they charge for orders involving penny stocks? How do the charges change depending on volume of orders (either volume of shares per order or volume of shares ordered over a period of time). Of course, the most important question to ask is how they deal with orders or securities listed on OTC quotation services like the Pink Sheets and the OTCBB.

What kind of research tools and resources are provided? You will pay more per order and overall for services with robust research tools and investment services, but sometimes they’re worth it.

Some reputable small cap stock brokers to get you started include: MB Trading, E*Trade, Zecco, Sharebuilder. However, these are just a small sampling. Please note that all these are established and well-known brokers.

You do not want to pick someone trying to sell you their services independently. There are many sharks in the online stock trading business; stick to the well-known stock brokers when entering the precarious microcap trading market.

I hope this helps you get started in your research for penny stock brokers.

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El Segundo, CA, United States (AHN) – The world’s largest toy maker posted a 33 percent decline in profit for the first quarter on Friday despite rising revenue.

Mattel said net income for the period ended March 31 was $16.6 million, or 5 cents a share, down 33 percent from $24.8 million, or 7 cents, last year.

Revenue, including positive effects of currency, was $952 million, up 8 percent from $880 million a year ago.

Analysts had expected earnings of 4 cents on revenue of about $907 million.

The California-based company said domestic sales rose 7 percent while international revenue grew 10 percent.

Worldwide sales of Barbie increased 14 percent. Brands under the Wheels unit, such as Matchbox, Hot Wheels and Tyco, saw revenue rise 4 percent, while Other Girls Brands, which include Disney Princess, grew 38 percent. Revenue from Mattel Girls & Boys Brands was up 15 percent to $656 million.

The Fisher-Price unit fell 2 percent to $309.9 million mainly from a decision to stop producing Sesame Street products.

The entertainment business gained from “Cars,” “Green Lantern” and “Toy Story” movie-related sales, rising 13 percent.

The results reflect the seasonal nature of the market, as the first quarter is the weakest sales period of the year for toy makers. Mattel also reported higher costs. Advertising and promotion expenses increased 8 percent to $101.8 million, while administrative costs grew 14 percent to $334.5 million.

“Our diverse portfolio of brands and countries has once again allowed us to deliver on our goal of consistent growth,” Robert Eckert, chief executive, said in a statement. “Additionally, we are well positioned to improve operating margin and deliver strong cash flow for the year.”

The company’s main rival and the second largest toy maker, Hasbro, posted a 71 percent decline in earnings on Thursday but said it anticipates a boost with the latest “Transformers” movie and two Marvel films, “Captain America” and “Thor,” to be released this summer.

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Let’s break it down in a very simple manner.

Penny Stock Trading

A stock trader is someone who buys and sells stock for a very short period of time-could be five seconds or five days.

The goal of the stock trader isn’t to plant money into some stock, water it and hope it will one day grow tenfold. The goal is to make some money and get out-to play the swings.

A penny stock trader is interested in the swings-the ups and downs. A penny stock with good volatility is best. It doesn’t matter if a stock opened at $1 on Monday and closed at $1 on Friday as long as it bounced around in the middle.

Penny Stock Investing

Unlike the trader, the penny stock investor will buy a stock and hold onto it for a longer period of time-could be a few months or years even.

The goal of the stock investor is to buy a stock and watch it grow to something larger. For instance, if the purchased penny stock was $1 per share today and $1.50 per share in five months, the investor is happy.

The investor holds the stock constantly and therefore all that matters is the buying price and the eventual selling price and not what happening in-between the two.

By in large, those who buy penny stocks tend to be traders-buying stock at $1 today and selling for $1.15 tomorrow and re-buying at $1 the next day. Whether you’re a penny stock trader or investor, penny stocks represent a fantastic opportunity for profit.

There are penny stocks for just about everything you can imagine. Want to know some “movie production penny stocks” that are trading on AMEX, Nasdaq and the NYSE? Check out that link. It goes to PennyStocksCapitalist.com, which is a site for penny stock investors and traders.

Another hot industry is oil and gas. The Nasdaq has some penny stock action in this industry. Here’s an article about “Nasdaq Oil and Gas Penny Stocks” from PennyStocksCapitalist.com. Check that out.

Author: Jason A. Martin
Article Source: EzineArticles.com
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There are primarily two forms of alternative investment management, hedge funds and managed futures. Hedge funds are invested in a vast number of products, both exchange listed and Over-the-Counter (OTC) derivatives. Managed futures are generally only invested in exchange listed commodity futures contracts, regulated by the Commodity Futures Trading Commission (CFTC). Be careful! If the wrong investment is chosen the investor may be left with a bad experience of alternative investment products. This article will focus on the very important issues of transparency, liquidity, lock ups, returns and taxes in regards to the alternative asset class. Readers should leave with a better understanding of a few of the primary issues involving any alternative asset investment.

TRANSPARENCY

Transparency is an issue with any investment. Most investors want to know exactly what their money is doing at all times. Giving money to someone who claims to have returns of X without knowing what the manager is actually doing is generally a bad idea. Transparency is becoming more and more of an issue as the universe of investable products grows exponentially. The recent hedge fund “blow-ups” are a case in point.

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Hedge funds are alternative investment vehicles that can be invested in anything from Johnson and Johnson common stock to over the counter derivatives based in Zimbabwe. The universe of products is virtually limitless. When an investor becomes a limited partner of a hedge fund, in most cases he/she is giving it free reign over the funds they have invested. If the manager chooses to, he/she could invest in waffles and chances are the investor would never have any idea. Hedge funds are not required to tell investors exactly where capital is being deployed. To make matters worse, many of the products do not have a closing value at the end of the day, so even if the investors knew what the funds were invested in they would have no idea what their investment was actually worth on any given day. There is absolutely no transparency. All the investors get is a quarterly statement informing them of gains or losses and maybe some commentary if the manager is not too busy. In some cases investors hear that, virtually overnight, more than 50% of their funds have been lost. Long-Term Capital Management is the most infamous case of a hedge fund “blowing up,” but recently there have been quite a few more that are going down in history, such as Amaranth’s $6 billion loss in 2006, Absolute Capital Groups’ 30-40% loss and Focus Capital’s 80% loss in early 2008.

The story is much clearer if the investor is involved in a managed futures product, or with a Commodity Trading Advisor (CTA). A CTA generally has a very specific strategy that is defined in the investor’s disclosure document, which is similar to a prospectus. The CTA is required to state exactly what products the investor’s money will be invested in as well as exactly how the manager plans to invest. What’s more, once invested with a CTA investors will receive a statement every time a trade is placed. At the end of every day the products in which investor capital is deployed are marked with a closing price determined by the exchange. This allows the investor to know exactly what his/her investment is worth.

It is really up to the investor as to what makes him or her comfortable. If one person does fine not know where his assets are invested then the transparency issue may not need to be considered, but for most of us it is of the utmost importance.

LIQUIDITY

Liquidity: a business, economics or investment term that refers to an assets ability to be easily converted to cash through an act of buying or selling without causing a significant movement in the price and with minimum loss of value. (defined by wikipedia.org)

Liquidity can be an issue with both hedge funds and managed futures, but a good manager will tend to avoid instruments that are illiquid or difficult to trade in and out of.

As stated previously, hedge fund managers can and do invest in a vast array of products. Many of these products are OTC derivatives or products that are traded between banks and the hedge funds directly. If the hedge fund buys an OTC derivative from a bank, and later decides it needs to sell that particular product back, the bank alone determines what they will buy it back for, or worse, if they can buy it back at all. In that case the hedge fund may not be able to get out of a losing position.

Liquidity is an issue that has gripped a number of hedge funds lately. Many have been forced to shut down because they were invested in highly illiquid derivatives linked to sub-prime mortgages. When the counter parties began to refuse to buy the products back the funds had no choice but to liquidate their portfolios at extremely discounted prices and shut their doors, or refuse investors’ requests to withdraw their money.

Unfortunately liquidity can be an issue for managed futures as well. Most managers only trade in highly liquid commodities; however, there are times when even the most liquid commodity can become illiquid very fast. Illiquidity can be caused by many factors, from politics to supply and demand imbalances to general investor fear and greed. A prudent manager will prevent investors from being too exposed to liquidity risks by implementing some sort of hedge, diversification or proper position sizing of the account.

When dealing in listed markets, as most managed futures products do, the counter party to any trade usually has a number of other counter parties willing to buy or sell at specified prices. This kind of open auction system generally allows for prices to be fair. To give investors even more comfort each account is guaranteed by the exchange clearing house through customer margin deposits, meaning that the chance of a counter party defaulting on any given transaction is drastically reduced. However, when dealing with obscure OTC markets, as many hedge funds do, most of the time there is only one counter party to the trade, meaning it is not guaranteed by anyone, which not only makes the chance of default higher but at the same time makes the likelihood of getting a fair price on any given trade much less.

When investing in a hedge fund or managed futures product it is important to understand how liquidity can affect the investment. If a manager is using too much leverage or is consistently involved in thinly traded OTC products that are less liquid it may be a sign that investing in that vehicle at that time is not wise.

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LOCK UP PERIOD

A lock up period is the time after the initial investment in which the investor is not allowed to withdraw funds from that particular vehicle. After the specified lock up period investors are free to withdraw funds as defined in the disclosure document of each hedge fund.

Almost all hedge funds have a lock up period. This period can range from as little as three months to longer than two years. Generally the more established the fund the longer the lock up period. A lock up period is generally good for managers and not so good for investors. If a manager has a lock up period of one year and immediately after making an investment the trading starts to go poorly, that manager has a right to continue trading that money until the lock up period is over; because the investor has previously agreed to the terms and conditions in the disclosure document he or she is not able to request redemption until the specified time period is up.

Managed futures products are different. Most managed futures products do not have lock up periods. There are a few that have lock ups ranging anywhere from three months to a year, but this is not the status quo in the industry. If an investment in a managed futures product needs to be redeemed it can generally be taken care of within a few hours. This is very beneficial if you have taxes due, college tuition that needs to be paid or any unexpected expenses that comes up.

Lock up periods will be foreign to most investors who have not invested in alternative investments before. Make sure when reading the disclosure document that the lock up and withdrawal periods are properly discussed. Also, note that in many cases the lock up period is an area that can be negotiated to the investor’s benefit.

RETURNS

Returns are returns, right? Wrong! Returns are a very deceiving form of analysis for any alternative investment. Most investors make investment decisions based on previous returns, but this is a flawed concept. The main issue is that past returns have absolutely nothing to do with future returns. This has been proven time and time again as managers that were once out-performing begin to under-perform and managers that were struggling rise to the top. Wise investors will not base their investment decisions on past returns or assumptions made about future returns.

The fact of the matter is that no manager really knows what returns will be from year to year. Managers can target a certain return but there is absolutely no guarantee that the goal will be achieved. If any manager, whether hedge fund or CTA, specifically promises a return that is a sign to seek a different manager. Likewise, if a manager touts his/her past returns it is a sign he/she does not fully understand that returns are completely unrelated to each other and have no bearing on the future.

There are numerous databases in which managers can post monthly returns and potential investors view them, but this is completely the wrong way to make any investment decision. Chasing returns leads investors down the wrong path and can have devastating effects on their capital (see “Transparency”).

What investors need to do is search through these alternative investment managers by strategy, not by returns. The investor should pick a few advisors from each category after reading about the managers’ approach to the market. Once a few are decided on, the investor should call each manager and request more information and/or a meeting. All managers will have a disclosure document and possibly some marketing material that can be given to potential investors. Meeting the manager of a hedge fund can be a difficult task unless the investor is placing a very large sum. CTAs, however, are generally much more open and willing to meet with investors, so getting a meeting with them is entirely possible.

Once the proper due diligence is done and the investor likes the manager’s strategy and approach, an investment can be made. Be careful not to invest too many assets with any one manager or specific style, as that is not proper diversification. It is wise for the investor to build a portfolio of alternative asset managers over a wide range of strategies, as this may reduce the risk of any one particular manager or style.

TAXES

Hedge funds often provide the investor with very unfavorable tax treatment because they are invested in many different products all over the world. This may have a vast array of consequences on the investor’s overall taxes. Hedge funds uniformly report investors’ gains or losses in August after each tax year, forcing an extension of filing. Additionally, the tax returns are very complex, often over 30 pages for each fund invested in. To try and explain all the possible tax consequences of a hedge fund would probably require an entire book. In the interest of time the entire spectrum of hedge fund tax accounting simply cannot be delved into at this point.

For managed futures products the tax accounting is very simple. Since most trades take place within Regulated Futures Contracts (RFC) regulated by the CFTC, contracts receive Internal Revenue Code Section 1256 treatment. In this case 60% of profits are taxed at the long-term capital gains rate and 40% are taxed at the short-term capital gains rate. For a profitable managed futures product this effective tax rate of 23% provides a 12% advantage over hedge funds that trade frequently. This can, however, be a stumbling block in the case of large losses. When a loss is recorded and 60/40 treatment has been elected the investor is only allowed to carry forward $3000 of those losses every year. If the investor’s loss is large this can be a real headache, as he/she will be carrying forward losses indefinitely. There is a bright side, and that is if the investor has created a portfolio of managed futures products and another manager has produced gains the investor can write off the loss against the gains of that other manager.

In the end calculating taxes for a managed futures product is much simpler than for a hedge fund. For some investors this may not be an issue, as their CPAs will manage everything, but it would be important to consult with the CPA prior to investing to make sure he/she fully understands the implications involved with the new investment.

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