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