Penny stocks are considered by the financial industry regulators, like the SEC and FINRA, to be securities which trade “over-the-counter”, as opposed to on a major stock exchange like the New York Stock Exchange (NYSE) or NASDAQ.
An example (as of this writing) would be Titan Pharmaceuticals (TTNP). If you go to Google Finance, you’ll see it listed as Public, OTC:TTNP.
(Important Note: I AM NOT RECOMMENDING THIS STOCK, JUST PROVIDING AN EXAMPLE). By comparison the well-known Google itself shows up on Google Finance as Public, NASDAQ:GOOG. (NOT RECOMMENDING THAT EITHER).
The regulators also consider any stock priced at less than $5.00 per share to be a penny stock. The threshold used to be $1.00 per share, which makes more sense, but inflation has caused the minimum price to be higher, while the name just stuck.
Penny stocks have most often been viewed as having higher than normal risks. They typically represent ownership in a company which has struggled to make a mark in its business, or which perhaps faces stiff competition without anything protecting it or differentiating it from competitors. Another possibility might be a company which makes a product which becomes outlawed or infringes on another company’s patents.
These very low-priced stocks are not for the faint of heart, or perhaps even the otherwise normally brave! They are definitely not something you should Read More …
Technorati Tags: Financial Ideas, How to Invest Stock, Investing strategy, Penny Stocks, Stock investing
April 26th, 2010 |
, let’s point out that anyone can contribute to it. That is, you can be our future student’s mom and dad, or grandma and grandpa, or godparents, or just family friends wanting to give a shower gift.
