Do all companies start off as .OB and .PK stocks? Is it a good idea to invest in these stocks?

Question

I know that it is a huge gamble. What is your opinion? Can you share some experience with investing in these type of stocks?

Answer 1

There are actually a couple of questions here.

No not all companies start out as .pk or .ob. Many however do fall from exchanges into those two categories when they no longer meet the listing requirements.

Some .pk stocks do make excellent investments. Those would be the foreign companies that are listed there. Nestle, Nintendo, Eletrolux, and many many others. Also a lot of bank stocks of smaller banks.

Answer 2

I read that this guy decided to buy out a penny stock company and he held 100% of the shares and had the certificates in a dresser. He noticed that shares of the company were still being traded, so he filled a complaint with the SEC. That's just one of the dangers of trading these stocks. Another thing can happen is the stocks could still be traded even though the company is no longer in business.

Answer 3

No, many companies go straight to the NYSE or Nasdaq. Stocks trading for pennies on the Pink Sheets or Bulletin Boards generally aren't that good - think about it, no CEO dreams that his companies shares are worth 50 cents. Companies are worth that little for a reason - because they aren't very good.
If you insist on investing in penny stocks, use the same rules you would for other companies. Read the financial statements with an especially wary eye.
Best of luck.

Answer 4

They are penny stocks that do not meet the criteria to be listed on one of the big exchanges. They are usually small or struggling companies. Huge risk w/potential for big reward. I have played around with them a little bit (less than 2% of portfolio). They are like gambling, which is kinda fun but not the best way to build wealth.

Answer 5

no, not always. they are generally small companies traded in second class markets. trading those stocks are definitely riskier.