Penny Stocks

peculative, and have a low price besides being generally negotiated in over-the-counter markets and smaller exchanges. They are low price stocks ($1 or less) form companies whose future operations are doubtful. These companies are tremendously speculative.

Boiler room (illegal) sales operators promoted many penny stocks by cold calling unsophisticated investors on the telephone to stress how much money they could make by buying these low priced stocks. To paraphrase an old saying , “There are no free lunches on Wall Street.”

If a share is being negotiated at $0.25 the most probable is that it is being negotiated at the right price and for a good reason. If the stock raises to $0.50 , an investor can achieve a return of 100%; if the company closes the investor loses all its investment.