Christian Morality Of The Penny Stocks

The other day I was driving with my brother. He invests (long-term) in the stock market, and he asked me something. How can I, as a Christian, can take part in the penny stocks market? Should there be a special Christian morality with penny stocks?

There are certainly biblical verses to consider. Jesus’ teaching on the bags of gold (Matt. 25:14-30) or Paul’s letter to Timothy, “Anyone who doesn’t provide for his family is worse than an unbeliever” (1 Tim. 5:8).

In this post, I want to share three details on how the market works and allow for you to consider.

Christian Morality Of The Penny Stocks

Terms:

What Is A Penny Stock?

You can find different terms for penny stocks. Some believe that a penny stock is a stock trading under $1. Others believe that a penny stocks is a stock trading under $5. And some believe that it is a stock trading under $20.
Go HERE for more info.

A Pump N’ Dump vs. Insider Trading?

A Pump N’ Dump has been confused with illegal Insider Trading.
Insider Trading is when trades aren’t made on public knowledge. Insider Trading is illegal.
A Pump N’ Dump, however, is an overall explosion of promotional news. Newsletters are sent out, blogs are posted, social media gets blasted with news that company XYZ is the next big thing. For it to be a genuine Pump N’ Dump, the news is paid for buy the company. This pumps up the stock price, and while the market price is being pumped up, the majority share holders (CEO, CFO, etc) sell their shares. After the people who pumped up the market with news have sold their shares, they dump the promotional ads. Hence, the term, Pump N’ (and) Dump.
This is legal, because the buying or selling is based on the same available news article(s).

What Is Swing Trading?

Swing Trading, simply put, is trading a stock based on its movement. I think of it like the game Frogger.
For example, in February 2020, many stock prices dropped due to the COVID-19 outbreak. However, today (August 2020) the economy is going back to a level of normalcy and the market is reacting with an optimistic uptrend.
Swing trading is not a long term investment. You buy a stock (a portion of a company), you hold for a time (day, week, month) and you sell when you so desire. It isn’t because I believe that the company is going to crash, but because I want to put my money in something moving faster.
Go HERE for more info.

Morality of Stock Trading

What my brother said really got me wondering. Can I, as a Christian, support penny stocks? Simple answer, yes.

The stock market exists to help grow an economy. Like I mentioned in my first post, companies like McDonald’s would likely never have gone beyond the local marketplace had it not been for the stock market.

Should I feel guilty for buying a stock when it’s moving well and sell when it’s slow? No. The fact is that when you have a small account, it’s not logical to hold for a long time.

A friend of mine has a lot of money. He can give his 6 figure account to a hedge fund and they do all of the investment work for him. In 10 or 20 years, he can take his 6 figures that has moved over 100% over the decade or two and live on it.

However, I have a $500 savings bond with my bank. In the past 5 years, the interest has raised the account gone up to $47.56. A grand total of $547.56. It’s a safe way to save, but it’s less than 10%.

Morally Opposed?

A friend on social media asked, “How can I know if the company I invest in is a supporter of Israel, anti-abortion, etc?” This person is asking specifically how to know that you are supporting a company that agrees with you morally.

This is why I share the details above.

A company, by law, has to share their information, although not specifically, “I support Israel”. Check out a company’s SEC (Security and Exchange Commission) filings. The SEC was essentially created to protect you, the investor.

If you are curious about a company, do the research.

Amoral?

Off topic, the word amoral means that you don’t have any moral convictions on a topic. As it pertains to the stock market, you’re buying the stock, not the product.

For example, maybe you have strong convictions regarding smoking marijuana (I personally oppose, even though it’s legal). But you hear of a company that is doing great work with medicinal marijuana. So while you don’t condone the smoking of marijuana to get high, the company uses the medical properties for good. But your convictions may prevent you from supporting it.

Another example, less controversial, is Apple (ticker symbol AAPL) or Tesla Motors (ticker symbol TSLA). Both are doing very well in the current market. But, I personally, don’t like Apple Computers or iPhone (albeit, I own one), and I don’t drive a Tesla car. Should this prevent me from buying the stock?

Again, this is your decision.

Final Thoughts

As I mentioned, I traded stocks because I wanted to learn something new. So be careful as you enter the market place. There’s a saying from the movie The Patriot “Aim small, miss small.” All I’m saying is that if you are interested in the market, feel free to put in a small account of $500 or $1000. The potential gains are small, but so are the losses.

Check out Investopedia’s Stock Simulator with a practice account.

Check out Questrade to start your trading.

Below are the people that we have learned from:

  • Timothy Sykes– Tim Sykes got me started with a lot of the learning and how it all works with his videos and weekly stock picks.
  • Paul (Superman)– I followed Paul’s stock picks as he was more focused on the uptrend of the stocks, as opposed to Tim who, at the time, was a Short Trader.
  • Analyze Your Trades– This third option may interest you if you are interested in the simple learning of the market.

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The links above are affiliate links of which I earn a commission. However, I have experience with both Tim Sykes and Superman’s programs., as well as Questrade. My wife is currently a student of Tim Sykes’ challenge.

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