What are Penny Stocks?
Penny stocks are shares that trade from a fraction of a penny to $5.
They are riskier than average investments, but have tremendous reward potential. Indeed, some penny stocks have gone from 25 cents to $20.00, while others have become worthless.
In the past, penny stocks had a bad name because of risk and lack of information about the companies.
Nowadays, investors are quickly learning that penny stocks represent all the small companies across America, that are great and have yet to grow or be discovered.
Many investors like penny stocks because it does not take a big cash outlay to get started, and you can own a piece of a good company inexpensively.
The upside of penny stocks is the ability to turn a small investment into a fortune.
The downside is the risk, volatility of the shares, and the lack of corporate transparency.
Did You Know?
Even companies like Playboy, Ford, GM, and Xerox used to be penny stocks (among many others that you would recognize).
While some companies have an initial public offering price at $20, for example, other corporations start a lot smaller than that.
Those that do trade in penny stock territory very often increase dramtically in price over the years as their business grows. These are the shares that make regular people into millionaires, as an intial investment becomes a small fortune!