0
Get a cheap online brokerage account and make trades for under $4 per transaction.
Do you know what a penny stock really is? Odds are, you’ve been subjected to wrong information. Today, I’ll shed some light on the situation.
Look through the Internet and you’re bound to come across at least 6-10 completely different definitions for penny stocks. For instance, one description I found said that penny stocks were simply "highly speculative" stocks. Oh? So if I were to buy a stock trading at $50 per share that’s "highly speculative" it would be a penny stock? I don’t think so.
Many definitions seemed to be stuck on the idea that penny stocks are any stocks selling for under $1. This is not correct either. First of all, this definition fails to account for inflation. Think about this, if a penny stock were anything under $1 in 1970 then, adjusting for inflation, the definition in 2008 would be anything under $5.60.
Yet other descriptions incorrectly define penny stocks simply as "low-priced" stock. What is low-priced stock? If Warren Buffet considers Yahoo! (NasdaqGS: YHOO) at $22 per share to be low-priced stock, is Yahoo! now a penny stock? Of course not. As you can see, these loose translations lead to all sorts of problems.
If we’re to look at the market as a whole and adjust for inflation, we can see that the U.S. Securities and Exchange Commission definition of penny stocks is pretty accurate. We can also see that the definition penny stocks is a dynamic one and subject to a little interpretation-saying that are only stocks under $1 is well beyond the bounds and incorrect.
According to the SEC, a penny stock generally refers to stock of very small companies trading under $5 that may be traded on the OTCBB, in Pink Sheets or (and this is what many miss) via securities exchanges and foreign securities exchanges.
There are many famous companies that were once penny stocks. And I’ll leave you with one-Microsoft.
Author: Jason A. Martin
I invite you to explore PennyStocksCapitalist.com to get all sorts of penny stocks tips, information and more. While you’re there, make sure you sign up for the free penny stocks newsletter. As a bonus, you’ll also receive a special report, "Penny Stocks Primer."
If you’re into Microcap stocks, check out this microcap stock tips Web site at MicrocapStockTips.com. There’s a free microcap stocks newsletter there as well.
Article Source: http://EzineArticles.com/?expert=Jason_A._Martin
The average penny stock is found on one of two places: Pink Sheets, LLC or the Over-the-Counter Bulletin Board (OTCBB). Until recently, it has been nearly impossible to get good information about companies like these.
Understanding The Penny Stock Market
Penny stocks are an investment fund alternative for those who have a tiny amount available for investing and are inclined to take the risk.
What is a penny stock? How do you define it? Is it prudent to get involved? Some feel that it’s not worthy of investing.
Understanding What Penny Stocks Are.
If you are thinking about getting into stock market investing for some extra cash, then penny stocks may be able to help you. While they are very risky, their profit potential is none the less amazing with a share being able to double.
What Is The Definition Of A Penny Stock
No matter which definition you choose to acknowledge, penny stock trading can enhance your stock market experience and allow you to make more money on your investments. This is the best method to use if you want to get into stock market.
Mail this post
Back to top