Why can't CNBC have a show on penny stocks?

Question

Where they talk about the latest OTC stocks and all. Why do they just have to cover stocks that nobody can afford?

Answer 1

Because you shouldn't trade penny stocks. While one in a thousand may hit it, the other 999 or so will lose you a ton of money.

Penny stocks are like gambling, except the odds with penny stocks are generally much worse!

The best way to consistently make money in the market is to learn how to trade. How to pick stocks, when to buy them and when to sell them.

Check out some of my other answers if you want details on this.

Anyways, that's the main reason for why there's no show on it. It would not be fiscally responsible of CNBC to do.

As for affording stocks, you don't have to buy 100 shares at a time. You can buy 10 shares of AAPL and hold it or 1 share of GOOG, etc.

Learn first, then invest!

Answer 2

Penny stocks are highly speculative, and are not of investment grade. Stocks listed on the pink sheets or over-the-counter do not have the same financial reporting requirements as those listed on the NASDAQ or NYSE. These risky stocks may be of bankrupt companies, or those that have limited liquidity or plain FRAUDULENT. "Investing" in penny stocks is basically gambling, however it is considered the risk are too high for the possible reward.

Billionaires such as Microsoft's Bill Gates or Berkshire Hathaway's Warren Buffet did not achieve their wealth through penny stocks.

Affordability is relative to the expected growth of a company, it would be wiser to purchase a single $100 stock rather than 10000 shares in a $.01 penny stock.

You may wish to refer to: http://biz.yahoo.com/fool/061027/116196628816.html

Answer 3

Penny stocks are loosely categorized companies with share prices of below $5 and with market caps of under $200 million. They are sometimes referred to as "the slot machines of the equity market" because of the money involved. There may be a good place for penny stocks in the portfolio of an experienced, advanced investor, however, if you follow this guide you will learn the most efficient strategies https://tr.im/c8109

Answer 4

Be careful when you're using the term "afford" in reference to stocks. Don't look at the stock price as a measure of affordability.

For example, Goldman-Sachs (GS) is a high-priced stock at $190.00, while Microsoft (MSFT) is low-priced at $28.84. However, there are other factors at play, such as outstanding shares, market capitalization, projected earnings, etc.

A good measure for the "cheapness" of a stock is generally Price divided by Earnings (P/E) which is basically telling you how many dollars you have to pay to expect $1 of profit. GS is a high-priced stock, but the P/E is 11.54 (meaning you're paying 11.54 in stock price to get the rights to $1 of expected profit. MSFT is low-priced, but with a P/E of 23.05, making it more "expensive". Quick disclaimer: you usually only want to compare P/E of similar companies because GS is in banking, which is a more conservative sector meaning that your 11.54 isn't likely to dramatically exceed expectations. MSFT is in technology which is a sector with more growth potential and a more likely chance (according to investors) of making much more profit.

So, don't look at affordability in terms of share price. CNBC doesn't talk about penny stocks and OTC stocks and pink sheet stocks because they are quite often bad investments (and too risky even if they are not bad investments) and CNBC has a reputation to uphold.

Answer 5

Because enough people are losing their shirts on penny stocks... most end of worthless. We only hear about the big winners because it's so unusual. I'm sure CNBC doesn't want to promote investing in what is usually a losing venture.