You may have received quite a bit of spam email from people promoting penny stocks also known as "small cap stocks". Here is some information to find out what all the fuss about penny stocks, and what are the risk on buying penny stocks.
According to the penny stock definition of Securities & Exchange Commission (SEC), any stock under $5 is a penny stock. However some investor set the bar at $1 per share. The penny stock issuing companies are quoted on the "pink sheets" system, otherwise termed as OTC trading.
Risk factors involved in buying penny stocks:
- Some of the penny stock issuing companies are not required to file with the SEC.
- There is lack of valid information about the company’s history. Mostly investor wants to invest in companies that have some kind of track record or can prove that they will make money. However mostly penny stocks issuing companies are fairly new or on the brink of bankruptcy.
- One more risk factor is that you may not be able to find a buyer if you decide to sell your penny stocks.
- If you invested your all money in a particular penny stock, there is a chance to lose all your money
Fast Moving Stock does not own any shares or plan to get a position(s) in the company(s) anytime soon. Moreover, we have not been compensated for the posting of this article/report/analysis, as this is just an opinion of our writer/contributor. Not recommandation to buy or sell any stocks Read full