| Should you buy penny stocks? That's an
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| | On top of that, if the stocks you're
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| excellent question. Let's look at some of
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| | looking into are listed on an exchange
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| the pros and cons.
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| | that isn't well known, they are probably
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| First of all, what is a penny stock? In
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| | not subject to all the minimum standards
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| the United States, it's a stock that's
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| | and listing requirements that other
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| worth less than $5 per share, regardless
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| | stocks are held to. This means that they
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| of the market. On the other hand, the
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| | aren't as stable.
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| term can also apply to any lower priced
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| | Another thing: Penny stocks are a great
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| and easily manipulated stock. It will
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| | source of income for fraudulent
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| often refer to a stock sold outside NYSE,
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| | individuals. This is due to the stock's
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| NASDAQ, and MEX, the three major stock
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| | less known status. Many of these same
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| exchanges.
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| | people have misled investors through
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| Because they're priced so cheaply, penny
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| | internet message boards and spam emails.
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| stocks are a very tempting way to break
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| | They get investors to pour huge amounts
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| into the stock market. Another reason
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| | of money into a stock that has no real
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| they're attractive is because they could
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| | potential for growth, and then selling
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| dramatically increase in value in short
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| | their own shares when the price rises.
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| order. But they also have a huge
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| | "Pump and Dump" is the name of this
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| potential for steep losses for the same
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| | infamous scheme. It has emptied the
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| exact reason.
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| | pockets of many a naive investor and
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| If you buy penny stocks, you may find
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| | lined the wallets of the fraudulent.
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| that they are harder to sell than you
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| | You might be tempted to buy penny stocks
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| anticipated. These stocks have fewer
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| | for their great prices. But be careful:
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| investors interested in them, so they are
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| | Keep in mind all the possible pitfalls
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| not traded as often as higher-priced,
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| | before you invest any kind of money.
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| popular stocks.
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