| That's a good question... should you buy penny | | | | listed on an exchange that isn't well known, they are |
| stocks? Let's look at some of the pros and cons. | | | | probably not subject to all the minimum standards |
| A penny stock in the United States is a stock in any | | | | and listing requirements that other stocks are held to. |
| market that you can trade for less than $5 per share. | | | | This means that they aren't as stable. |
| In common conversation, however, the term can | | | | Because of their lesser-known status, penny stocks |
| apply to any low-priced, easily manipulated stock, and | | | | have become a huge area of income for fraudulent |
| it often refers to stocks sold outside one of the | | | | individuals. Many investors have been misled by these |
| three major exchanges (NYSE, NASDAQ, and AMEX). | | | | people through spam emails and internet message |
| Penny stocks, because they are priced so low, are a | | | | boards. |
| tempting way to get into the stock market. Their | | | | What they do is they encourage investors to dump |
| low prices mean they have the potential for | | | | huge amounts of cash into a stock that has no |
| increases of several hundred percent over a few | | | | growth potential, then bailing out and selling their own |
| days. However, for the exact same reason, they | | | | shares as soon as the prices rise. This scheme, called |
| have a huge potential for quick loss. | | | | a "Pump and Dump" results in huge profits for the |
| If you buy penny stocks, you just might have a | | | | fraudulent, and huge losses for the naive. |
| tough time selling them them off. These stocks have | | | | The cheap prices might make you inclined to buy |
| fewer investors interested in them, so they are not | | | | penny stocks. But be careful: Keep in mind all the |
| traded as often as higher-priced, popular stocks. | | | | possible pitfalls before you invest any kind of money. |
| On top of that, if the stocks you're looking into are | | | | |