I recently was watching the movie Wolf of Wall Street, and in that movie they talk a lot about penny stocks. Many people don’t know much about penny stocks, and I wanted to talk about it a little bit more since it’s something that isn’t touched upon a lot in the blogging world.
So, what is a penny stock?
A penny stock is a cheap stock that is usually under $5. Yup, not all penny stocks are actually a penny. Penny stocks are risky to deal with – you can lose your money very quickly, and penny stocks are sometimes filled with scams and lies.
It’s always best to be extremely careful when dealing with penny stocks, and to do as much research as you possibly can before you buy them. Even though they are cheap, it is still money that you are dealing with.
If you are going to invest in penny stocks, then you should be willing to face the fact that you may lose all of your money. The possibility is definitely there that you may lose money, especially if you do not do any of your own research.
Why would anyone invest in penny stocks if they have such a bad reputation?
People invest in penny stocks because like with most things, there is a possibility that you can make some money with penny stocks.
Many invest in penny stocks because they are so volatile. You may pay $1 for a stock and then there is a small chance that it could jump to $5 the very next week. It doesn’t happen often, but some (a very small amount of people) actually do make a decent profit from investing in penny stocks.
You should always be careful though. Usually with penny stocks there is limited information about the companies that are being traded. Also, many companies are known to inflate the company by issuing fake press releases and news articles about the company so that investors will invest in the company, while the company dumps all of its shares so that they can make money and have their investors lose money.
Have you ever thought about investing in penny stocks? Why or why not?
