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