Anyone have experience with Penny Stocks?

[KDHP]

The ads make it look so good! Little output, high returns! Thanks ahead of time!

[Zukin]

Yes, I've had some good experiences:

WWAT a Performance · The Big Winner
Songzai International Holding Group: What a Performance! · The Big Winner

and some bad ones:
USWF.PK? More Like USWF.FU · The Big Winner

If you're willing to take risks, penny stocks are fun. Otherwise, it's best to keep 90 to 95 percent of your money in a diversified portfolio of index funds with the proper amount of asset allocation relative to the risk you're willing to take. Some might say that it's best to keep 100% of your portfolio in index funds, but I find penny stocks are too fun to stay away.

[Brutha]

What ad's are you talking about?
The spam mails that advertise Penny Stocks?

[AdamF24]

Penny stocks are very risky. You need to realize that almost all penny stocks are shell companies, and that they basically have no real value. I dabbled in penny stocks in my early investing career, but learned quickly that they aren't the right choice if you want to make money in the long term. Penny stocks are also plagued with pumpers and dumpers (probably the ads you've seen are by pumpers).

If you don't know much about trading penny stocks, I'd be very cautious to start getting into that. Be very careful, you can lose money just as quickly as you can make it with penny stocks.

I actually wrote an article on my blog about the risks of penny stocks if you're interested in more information. Click here for the article.

[OnionJack]

I agree with Adam here. The odds of making money in penny stocks are pretty much nil.

If you take a large enough stake in a penny stock to earn a real return you're pushing up the price yourself. This is because the volume even if it looks to be in the millions is very thin. Think a million shares of a $.005 stock price.

But if you do have some extra cash and want to get a feel for just stocks in general. I found it kind of fun. Most of the initial investment $500 was lost. Or is still sitting in those penny stocks because it is not worth it to cash it out because of the transaction fee.

Small-cap are just as risky but at least have the opportunity to give you an actual return. Look for sub-$10 share price but actually listed on nasdaq/nyse/amex.

-OJ

[Aryeh Enoch]

Stop kidding yourself with crap like this. Go follow your dream and if that's out of your reach right now, find a job you enjoy. Money isn't everything unless you need to provide for your family. Understand providing doesn't mean buying an Xbox, a TV for each of your kids, etc.

[SnerpGoodWord]

I think it's pretty certain that OP was just the start of a spam setup, but I figure it's my public duty to remind people that any penny stock you see anyone advertising is most likely a pump-and-dump scam. The scams are reportedly run by crime rings in Russia and the far east. It works something like this:

1) The crime ring picks a penny stock. It really doesn't matter which one, but ones with moderate daily volume and shares outstanding work best. It also works better if the stock in question can't be borrowed so you can't short it.

2) a pink sheet trader working for the ring starts making a market (bid side only) in the penny stock in question and eventually acquires 10's or 100's of thousands of dollars in inventory. This activity typically raises the stock price some.

3) The crime ring uses a computer botnet to spam everyone on the internet about "Hot Penny Stocks" or whatever and specifically mentions the ticker symbol chosen in 1). Unlike Nigerian scammers, these guys are sometimes sophisticated about western culture, and can make themselves look halfway legit to people who know nothing about the markets. They never offer to sell you any stock (they're not brokers) - the whole point is just to get everyone looking at the ticker symbol.

4) Some tiny percentage of the people spammed in 3) go look at the stock, see it's going up (due to 2)), and decide to buy some. Note that they can only buy, not sell since they typically don't yet own any and the stocks are typically not available to short. This buying activity often moves the price up anywhere from 5x to 20x.

5) The trader from 2) switches to making a market on the ask side, selling his inventory to the suckers from 4) at a huge profit - probably several hundred thousand dollars at least.

6) The trader from 2),5) launders a cut of his ill gotten loot back to the crime ring.

It's a classic con. Don't fall for it.

[Yosako]

Originally Posted by SnerpGoodWord

I think it's pretty certain that OP was just the start of a spam setup, but I figure it's my public duty to remind people that any penny stock you see anyone advertising is most likely a pump-and-dump scam. The scams are reportedly run by crime rings in Russia and the far east. It works something like this:

1) The crime ring picks a penny stock. It really doesn't matter which one, but ones with moderate daily volume and shares outstanding work best. It also works better if the stock in question can't be borrowed so you can't short it.

2) a pink sheet trader working for the ring starts making a market (bid side only) in the penny stock in question and eventually acquires 10's or 100's of thousands of dollars in inventory. This activity typically raises the stock price some.

3) The crime ring uses a computer botnet to spam everyone on the internet about "Hot Penny Stocks" or whatever and specifically mentions the ticker symbol chosen in 1). Unlike Nigerian scammers, these guys are sometimes sophisticated about western culture, and can make themselves look halfway legit to people who know nothing about the markets. They never offer to sell you any stock (they're not brokers) - the whole point is just to get everyone looking at the ticker symbol.

4) Some tiny percentage of the people spammed in 3) go look at the stock, see it's going up (due to 2)), and decide to buy some. Note that they can only buy, not sell since they typically don't yet own any and the stocks are typically not available to short. This buying activity often moves the price up anywhere from 5x to 20x.

5) The trader from 2) switches to making a market on the ask side, selling his inventory to the suckers from 4) at a huge profit - probably several hundred thousand dollars at least.

6) The trader from 2),5) launders a cut of his ill gotten loot back to the crime ring.

It's a classic con. Don't fall for it.

Scam or not, I'm gonna make money! (I know how the game is played)

[curiouslyrandom]

I inherited some penny stocks that my parents had held onto for 20 years. It's a legit company, my dad kept track of it all that time. There were times when stock went WAY up because someone bought a few thousand shares a 40 cents each, and times when it went WAY down, as it has in the past two years. I mean it tanked.

The ads may be scams, but even legitimate penny stocks can end up worthless.

[Brutha]

I think it's pretty certain that OP was just the start of a spam setup, but I figure it's my public duty to remind people that any penny stock you see anyone advertising is most likely a pump-and-dump scam.

Given the this thread was started in 2007 I think that the original post probably had a spammy signature and that signature got deleted when the post was banned for another post that he wrote.
Nevertheless I hereby close this thread to avoid it getting found by spammers via Google.