Ask the Fool Penny Math

Q:

With penny stocks, I can buy more shares per dollar than I can with more expensive stocks. Then, when the shares go up, I'll make more money, right?

- C.F., Erie

A:

Watch out. It is a common misconception that penny stocks are a bargain because you can buy so many for so little. Remember that both a 60-cent stock and an $80 one can go up (or down!) by, say, 5 percent in one day. For the 60-cent stock, that means a 3-cent increase, to 63 cents. For the $80 stock, it's a $4 jump, to $84.

Penny stocks are more likely to eventually plummet than to skyrocket. They are risky, often hyped and manipulated by ne'er-do-wells. Steer clear, and look instead for stock in healthy, growing companies you understand. In the last five years, you could have doubled your money on shares of Target Corp., and you could have more than tripled it with Boeing Co. stock. You would have lost nearly 20 percent on Sara Lee Corp. stock, but even that beats many penny stocks, which might have left you with mere pennies. It is fun to own 5,000 shares of something, but not when they crash - as they often do.

Q:

Where online can I look up the rate of home-value appreciation in a region?

- M.R., Tallahassee, Fla.

A:

One good resource is mortgage giant Freddie Mac. At its Web site (

» READ MORE: www

. freddiemac.com/finance/

cmhpi), it provides its Conventional Mortgage Home Price Index, measuring typical price inflation for homes nationally, within each state, and within more than 160 metropolitan areas. Realtor.com offers local market conditions, too.

You can also get lots of information from good real estate agents in your area.