Blog : Market Events

by Peter Leeds on March 5th, 2012

Lots going on in the world of penny stocks, and we are watching many macroeconomic events to help us generate our shortlists of the best penny stocks to buy.  As always for penny stock investors, the penny stocks to buy blog is the place to get the latest.

For example, tomorrow is Super Tuesday, where 10 States vote 419 delegates for the remaining 4 presidential hopefuls.
 
Spoiler alert - Romney wins nomination, Obama wins presidency.  Understand that this isn't based on hope or opinion, but rather math.  Anything can happen of course, but it won't, and soon you'll be watching Romney go head to head with Obama.  Then, you'll be watching Obama get reelected.  We've done the math, poured over the electoral college map, and assessed the likelihood of various events.  Outcomes remain what we predicted back in 2011, Romney vs. Obama, Obama wins (by a pretty good margin at that).

What does this mean for penny stocks and penny stock investors?  For one, the entire Republican party nomination process takes the attention of many penny stock investors, and following that they'll be fixated on the presidential election.

At the same time, because of the election, some penny stock companies will put off purchase decisions, while other penny stock companies will see their revenues decline (because of the purchase decisions that were delayed).

Depending on which party wins, it will have effects on those penny stocks and penny stock sectors that the political party in power is more ameniable towards.  We expect Democrats to support clean energy and stem cell research to a degree greater than the Republicans would have, so we adjust our decisions of the best penny stocks to buy with that in mind.

Another event that impacts penny stocks (both our former penny stock picks and our decisions for future penny stock picks) is that of spiking oil.  Tensions with Iran are heated, but that is all it will remain for some time.  Even once Iran has the capability to build a weaponized bomb, they would still need a year or more to finish the development.  Add to this that there is still no evidence (from the CIA or the IAEA) that Iran is attempting to build weaponized nuclear material.  Common thought now is that any strike against Iran would actually encourage Iran to make sure they went nuclear, whereas right now it's all conjecture.

The point for penny stocks is that the risk premium on the price to buy oil is about as high as we think it will get for a while.  At the same time, a global economic slowdown is putting a damper on oil prices, over-ruling the risk premium.  Look for oil to come back down towards $103, barring any material events.

Oil prices will always affect ALL our penny stock picks.  Oil services penny stocks, and oil exploration or production penny stocks will benefit from higher costs to buy crude.  Most other types of penny stocks we've profiled will see their costs increase and their profits decline as it takes more to buy oil.

At the same time, higher buy prices for oil will slow a lot of business activity down, and that will eventually hit most of the penny stocks from all sectors.  Of course, if oil comes down in price as we expect, that should benefit all those same penny stocks that would have suffered higher prices. 

Think of it like a teeter-totter.  As oil prices rise, it helps some penny stocks and penny stock sectors, but it hurts other penny stocks and penny stock sectors.  As oil prices fall, it helps some penny stocks and penny stock sectors, but it hurts other penny stocks and penny stock sectors.

We'll keep an eye on other events that could affect penny stocks, our former penny stock picks, and potentially lead to new opportunities for the best penny stocks to buy.  As always, we'll update accordingly here on the penny stock to buy blog.

Have a penny stock or a penny stock related story you want to ask about?  Just let our penny stocks team know, and we'll consider including your idea in an upcoming penny stocks to buy blog.