Penny Stock Definitions and Risks

January 15, 2010 by  

One of the most volatile fields of investing is the field of penny stock investing. Penny stocks, likewise recognized as micro cap stocks, small cap stocks or nano stocks, are shares with little market capitalization and little price per share.

Many delineate penny stocks as plainly just micro cap stocks. Micro cap stocks really take a more specific definition. If a corporate entity’s market capitalization is below 250 million dollars, then its stock will be viewed a micro cap stock.

Yet penny stocks specifically are more commonly associated with 1 of two definitions. One is that the share is traded for 5 bucks or less per share. The second definition is plainly that the share is traded via OTC (Over-the-Counter) quotation services, such as the Pink Sheets or the OTCBB.

Note that all these variables establish a stock more shaky. The Web is overflowing with synthetic hype regarding penny stocks, but the truth is that it is a highly unstable and risky market in which to invest. Just as stocks can increase in value quickly, they may drop into oblivion just as speedily.

A key quality of a winning penny stock investor will be that he or she will begin seeking good penny stocks through the assistance of a respectable online penny stock broker. He or she will avoid penny stock message boards and learn where to buy penny stocks with patience and caution.

To make matters all the more challenging, it can often be very hard to research and support true information on corporations listed on the OTC quotation services. Oft times, when you do quick lookups online, you’ll find invented data spread to unnaturally hype the stock and exploit beginner investors.

Thus if you opt to pursue penny stocks, be ready to be really distrustful and guarded about your information sources. And deal carefully, very cautiously.

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Comments

9 Responses to “Penny Stock Definitions and Risks”

  1. lutel on April 18th, 2010 9:21 am

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  3. ZORCH on September 17th, 2010 6:10 am

    Sure should. I lived in the SF bay area for 30 years. Folks just got numb about it. Everyone know to keep slippers and a flashlight under the bed (night quake, broken glass) and a half tank of gas in the car (no electricity, no gas stations working) and food for a week and all that. But actually prepared, I'll bet less than 15% of the people actually were.

    If you want a good pubilcation on the subject, get the handout the US Coast and Geodetic Survey put out on the anniversary of the 1906 SF quake. Absolutely great advice on preparations and expectations (your house will fall, but you must still pay the mortgage).

    So,be different. Be actually prepared. Then you sleep better.

  4. JohnMMacintyre on October 13th, 2010 4:29 pm

    2010-10-08 Quotation to Provide Tailoring Services to Staff for Bank Negara Malaysia Pulau Pinang [Closing Date: 2…

  5. John in Germany on November 9th, 2010 1:57 pm

    Morning Daniel

    That is one of the risks that one takes when providing air space for people that have no respect for anything.

    Trouble is they are the first to cry the BBC is biased, we can get no air time ,and they complain about us. That is the problem with democracy it has to be fair, and even to the point of allowing big mouthed propagandists a say. To be fair he would be in trouble at home if he had not used the opportunity. That is the whole point, such people have no respect for their own. And it is amazing how people disappear in non DEMOCRATIC countries, never to be seen again.

    Slowly and surely the truth is creeping out, increased military presence, still no election results /presidential. The big bang is going to come, Got help Zimbabwe, it is already beginning to smell of civil war. Let us hope the West steps in before it is to late, and stops the cancer before it spreads.

    John in Germany

  6. eternus on January 22nd, 2011 10:57 am

    Hey, what's the point in anything if we are so fragile? I mean if you are going to take our fragility as an excuse for doing nothing, then that's exactly what you'll do. My view is that even though we are fragile and can die in any moment, we've gotta do something. Some choose college, others make other choices, but whether we like it or not something is going to be done before we die…

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  8. kukkeeme on June 15th, 2011 1:05 pm

    I wouldn't settle for being unhappy.

  9. TigrrJuice on August 17th, 2011 2:20 am

    #3words Fantasy Stock Broker… you don’t know? you better ask somebody!

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