Why do people avoid penny stocks?

[Issa Fathima Jasmine]

They are traded at low prices.

<span style=”color: #252525; font-family: sans-serif;”><span style=”font-size: 14px;”>From wikipedia: Many penny stocks, particularly those that trade for fractions of a cent, are thinly traded. They can become the target of </span></span>stock promoters<span style=”color: #252525; font-family: sans-serif; font-size: 14px;”> and </span>manipulators<span style=”color: #252525; font-family: sans-serif; font-size: 14px;”>.</span><sup id=”cite_ref-7″ class=”reference” style=”line-height: 1; unicode-bidi: -webkit-isolate; white-space: nowrap; font-size: 11.199999809265137px; color: #252525; font-family: sans-serif;”>[7]</sup><span style=”color: #252525; font-family: sans-serif; font-size: 14px;”> These manipulators first purchase large quantities of stock, then artificially inflate the share price through false and misleading positive statements. This is referred to as a “</span>pump and dump<span style=”color: #252525; font-family: sans-serif; font-size: 14px;”>”</span><sup id=”cite_ref-8″ class=”reference” style=”line-height: 1; unicode-bidi: -webkit-isolate; white-space: nowrap; font-size: 11.199999809265137px; color: #252525; font-family: sans-serif;”>[</sup><span style=”color: #252525; font-family: sans-serif; font-size: 14px;”> scheme. The pump and dump is a form of </span>microcap stock fraud<span style=”color: #252525; font-family: sans-serif; font-size: 14px;”>.</span>

<span style=”color: #252525; font-family: sans-serif; font-size: 14px;”>The expanding use of the Internet and personal communication devices has made penny stock scams easier to perpetrate.</span><sup id=”cite_ref-11″ class=”reference” style=”line-height: 1; unicode-bidi: -webkit-isolate; white-space: nowrap; font-size: 11.199999809265137px; color: #252525; font-family: sans-serif;”>[11]</sup>

[Annesh]

because of low liquidity

[Aruna]

High risk and low volume

[monish kumar]

because traders(stronger hands) can easily manipulate the stocks.

[Maruti Patil]

Penny stocks are low prices and very volatile with high risk involved thus people avoid such stocks

[Author]

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