It tends to be complicated when deciding what stocks you want to invest in. Many people want to spend less and gain more, it’s not rocket science. But most of us don’t know much about investing in Penny Stocks, yet think it is the way to go. The “it’s fairly cheap, it’s worth it” attitude might just get you into trouble.
Penny stocks are shares of small companies that trade under $5.00. In some countries penny stocks are called cent stocks. Many people buy a lot of penny stocks worth anywhere under $5.00 expecting and hoping for the company to become big, but the truth is most don’t. About 90 percent of penny stocks are scams, frauds, or just should not be made public. Now the very few do go through several different investors. They start out with a small retail buyer, than a larger retail buyer invests, then small institution and so on. Most institution buyers will not even glance at a penny stock under $5. Most penny stocks are cheap for a reason, because they hold no value and will never become big and they attract people for the wrong reasons. People want to spend money on investing in something, anything, and then it becomes a waste. Almost all big investors do not want anything to do with penny stocks because most are only worth under $500 million. So hold your pennies and instead buy a lottery ticket!