Considering buying Penny Stocks? The dream of many speculative investors is buying into an investment on the ground floor at pennies per share and riding out a wave of momentum until it crests to then sell it for a handsome profit. Inspired by stories of people who profited by this stock trading strategy, these people find their way to the alluring, yet infamous, penny stocks.
Penny stocks are generally just low-priced stocks trading off the major exchanges on the Over the Counter Bulletin Board (OTCBB) and on Pink Sheets. The Securities and Exchange Commission (SEC) considers any stock trading under $5 to be a penny stock. The benefits of buying penny stocks are usually of a speculative nature though some of them are well-managed companies that possess a good potential for future growth.