Are they a wise short term investment?
Lets say you have $1000 to play with and you buy some shares for a penny each. When it reaches 2 penny, you sell and then BAM %%% You are RICH!!!!!
Versus you buy something that is $10 dolar a share and dont' get much if it rises by a dollar.
2007-07-19 05:16:32 · 5 answers · asked by Anonymous in Business & Finance ➔ Investing
My ex-wife took her Series Seven examinations to qualify as a stock broker for a penny-stock trading firm. It took her a while to figure out that she was joining what amounted to a long-running scam operation. The company was shut down within of year of her joining them, but not after she herself had fallen prey to the manipulations of some of her fellow brokers, using her own money. By then, we were no longer married, but I got a pretty good look at how the penny traders manipulate the market and rip clients off.
If you have done your due diligence and really believe in a company that you can buy as a penny stock, and if you're going to buy and hold, then you could possibly do well.
Also, it's possible to do well with an initial investment. At least at my ex's firm, they would get people to make an initial investment of a couple thousand dollars and then generate an impressive short-term gain. The next, bigger investment would go south. Or else they would mercilessly churn the accounts of clients, skimming off eight and ten percent of the client's money with every transaction into the next "hot deal."
Now, this particular firm was shut down. The SEC does catch up to the worst of the bad guys. However, this takes time...
If you want to turn that $1,000 into quick $2,000, a more reliable way would be to go into a casino and put all $1,000 on black. Your chances are a little worse than 50/50. But at least no one's going to skim fees and costs off your $2,000 if you do win.
2007-07-19 06:24:45 · answer #1 · answered by Yankee in London 4 · 0⤊ 0⤋
Penny stocks are not good investments. There is a reason that they sell for a pennies (actually, in most cases, less than $5 is a penny stock).
They are easily manipulated and when you want to get out, the volume is so low that you need to give a big discount to get it sold. In some cases, the cost of selling them is higher than what they're worth.
Most legitimate brokerage firms have rules prohibiting their brokers from recommending penny stocks to their clients.
Again, bad Idea. Invest there and you most likely have a 95% chance of losing everything.
2007-07-19 06:01:54 · answer #2 · answered by Steve B 2 · 0⤊ 0⤋
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/4ed13
2015-01-25 03:29:28 · answer #3 · answered by Anonymous · 0⤊ 0⤋
many human beings think of that penny shares are a competent concept on the grounds so which you may purchase a variety of of shares for an extremely small fee. the priority is that maximum of those companies are in dire financial situations, making them very volatile investments. the companies oftentimes have little or no earnings and function with extensive bills. quite than procuring a variety of of penny shares, look into getting some shares of a astounding corporation.
2016-11-09 21:45:06 · answer #4 · answered by gracely 4 · 0⤊ 0⤋
Penny Stocks are the last place to start investing in. It's typical for Newbies to do so. it's also typical that they lose a significant amount of their investments.
Consider yourself warned.
2007-07-19 05:47:17 · answer #5 · answered by Common Sense 7 · 0⤊ 0⤋
they are wise but its not that simple you have to be able to lose to win CHA CHING
2007-07-19 05:20:41 · answer #6 · answered by Anonymous · 0⤊ 1⤋