Stay Away From Penny Stocks!

I have talked about penny stocks here before.

I wanted to bring them up again, because now that I spend more time on Twitter and elsewhere online, I see people getting involved with penny stocks and completely ignoring actual investing.

Penny stocks are companies with a share price under $1.00.

It can be very enticing to new investors to buy shares in one of these companies because the price is very low, allowing you the chance to buy a few thousand shares.  You begin to fantasize about the stock going from a penny, to a dollar, or maybe even as high as $10.

Let me assure you that the likelihood of this happening is slim to none.

True, there have been cases in the past where a penny stock has gone on to become a real company, making early investors rich.  However, finding that diamond in the rough is like finding a needle in a haystack.  It is almost impossible to identify a company with a market cap of $3,000,000 and project what their future is going to be.

I think you would be much better served by investing in an initial public offering (IPO) of a young, promising company with potential – like, for example, Eventbrite (NYSE: EB).

Disclaimer/Disclosure Statement: Information in this article is not intended to be a recommendation to invest in any stock.  Rather, it is presented for readers’ education and consideration when making their own investment decisions.  The author has no position in any of the stocks mentioned.

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click here to be taken to its Amazon page.

(Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)