Penny Stocks Research

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questions about the stock market (penny stocks)?

I’ve been hearing a lot about penny stocks lately and would like to do my own research and see if this is something that I want to get involved with. I have read a lot of articles and blogs on what a penny stock is and how things work. I get what is supposed to happen. I want to know where to find a list of penny stocks that are available. I’m not quite sure where to find a list of stocks period. What I would like to do is find a list, do my research on the companies and do a mock investment and see how well I do before I put actual money in to the penny stock market. If anyone knows where to find a list of stocks and their values daily I would greatly appreciate it. Thank you

Penny stocks are far riskier than other stocks. They are completely inappropriate for the novice investor.

The following information is directly from the SEC (Securities and Exchange Commission) website. If you do not fully understand all of these risks, avoid penny stocks.

“How Are Microcap Stocks Different From Other Stocks?

Lack of Public Information

The biggest difference between a microcap stock and other stocks is the amount of reliable, publicly available information about the company. Larger public companies file reports with the SEC that any investor can get for free from the SEC’s website. Professional stock analysts regularly research and write about larger public companies, and it’s easy to find their stock prices in the newspaper. In contrast, information about microcap companies can be extremely difficult to find, making them more vulnerable to investment fraud schemes.

No Minimum Listing Standards

Companies that trade their stocks on major exchanges and in the Nasdaq Stock Market must meet minimum listing standards. For example, they must have minimum amounts of net assets and minimum numbers of shareholders. In contrast, companies on the OTCBB or the Pink Sheets do not have to meet any minimum standards.

Risk

While all investments involve risk, microcap stocks are among the most risky. Many microcap companies tend to be new and have no proven track record. Some of these companies have no assets or operations. Others have products and services that are still in development or have yet to be tested in the market. Another risk that pertains to microcap stocks involves the low volumes of trades. Because microcap stocks trade in low volumes, any size of trade can have a large percentage impact on the price of the stock.”

The SEC document also includes a section on frauds in small stocks including:

- E-Mail spam
- Internet fraud
- Paid promoters
- “Boiler Rooms” and cold calling
- Questionable Press Releases
- “Pump and Dump” schemes

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