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Penny Stocks

 

Penny stocks are any stocks that trade for less that $5 per share. Many of these stocks trade on the over-the-counter bulletin board. The over-the-counter bulletin board is not part of the NASDAQ, NYSE any other major exchange.

 

The people who buy pennys stocks tend to be either experts with decades of experience or beginners who have no clue what they are getting into.

 

Penny stocks are often manipulated by criminals who pump and dump the shares.

 

Penny stocks are extremely risky. A study found that during the 2000 to 2009 bear market, the average penny stock investor lost nearly half of their investment. During this same time period the S&P was flat. The chart below illustrate the varying returns.

 

penny

 

FROM BAD TO WORSE

 

When we exclude the "penny stocks" that trade on major exchanges such as the NASDAQ and NYSE, about 90% of all over-the-counter stocks (AKA pink sheet stocks) eventually become worthless.

 

NEXT ARTICLE: Ponzi schemes

 

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