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URL:  https://boards.fool.com/that-isn39t-investing-that39s-a-recipe-for-34273518.aspx

Subject:  Re: New here need help Date:  8/14/2019  5:16 PM
Author:  CMF_Fuskie Number:  29297 of 29772

That isn't investing. That's a recipe for losing money.

OTC stocks, otherwise known as penny stocks and pink sheet stocks, are highly risky investments whose companies are often businesses in name only. A Penny Stock is one that trades at a relatively low price (just a few pennies) and non-existent market capitalization, usually outside of the major market exchanges. These types of stocks are generally considered to be highly speculative and high risk because of their lack of liquidity, large bid-ask spreads, small capitalization and limited following and disclosure. They will often trade over the counter through the OTCBB and pink sheets.

In other words, there's no substance or "there" there.

http://www.investopedia.com/terms/p/pennystock.asp

Penny stocks are like a house of cards: the foundation is soft, the framework is fragile and the structure can fall at any moment. Although tempting because they are so inexpensive, penny stocks are highly risky investments that tend to fall apart quickly.

http://www.investopedia.com/articles/investing/010815/why-do...

If you still want to buy a penny stock over the counter, here's how you can go about it:

The process of purchasing over-the-counter (OTC) stocks is different than purchasing stock from companies on the NYSE and the NASDAQ. The major difference is that OTC securities are unlisted, so there is no central exchange for the market. All orders of OTC securities must be made through market makers who, instead of just matching orders, actually carry an inventory of securities to facilitate trading.

http://www.investopedia.com/ask/answers/06/buyotc.asp

Some penny stocks are the tools of pump and dump scam artists. The criminals acquire the name of an empty company which is nothing more than a shell, issue valueless shares, then fabricate a lot of hype about the up and coming promise of the company and try to drum up excitement on financial and investing websites and discussion forums in order to drive up the price by a few pennies. Then, after naive investors have poured thousands into the company based on empty promises, the crooks dump out of their remaining shares and pocket the profits, leaving investors holding an empty bag.

It's a cynical variation on the Benjamin Franklin saying, a penny saved is a penny earned. In this case, a penny scammed adds up to huge returns on the backs of unsuspecting investors.

All companies start somewhere but you shouldn't assume any of them will become the next Walmart. Bottom line, if a company doesn't have growing revenues, consistent profits, a recognizable management team, and a product or service that has both demand and a competitive advantage, you would probably be better off blowing your cash in Vegas.

Fuskie
Who can think of no good reasons why anyone who doesn't want to lose their shirt should be interested in penny stocks...

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