The most common thing that you hear out there in the Stock Market World is that Penny stocks are super risky and that one should definitely stay away from them. But do we know for sure that this is really how it is out there? Are All Penny Stocks a Scam? I mean really, are they all a SCAM and will by trading penny stocks truly risk losing all of your money? Well, let me ask you another question. When trading the BIG board stocks (the traditional Nasdaq stocks), do you always feel confident that you won’t lose your money? Of course not, there is a very good chance that you could lose your money either way, by trading penny stocks as well as big board stocks. Please take a look below for a more detailed answer, breakdown as well as an analysis of this question.
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Are All Penny Stocks a Scam?
The answer here will be determined by the details from the question itself. More information is required to be able to give a correct answer. Let me explain. Are all Penny Stock companies a scam, is the company a fake company, are all of the PR’s, news and filings fake and a scam in a particular Penny Stock company, is the run that the company’s stock is experiencing currently fake? As you can see things are not always as black and white as we would like them to be. Okay, so the answer to all of the scam* questions above is most definitely a NO. When it comes to the Penny Stock world, there are definitely scams, but there are also real companies out there with actual product, revenue, some of them have property (example.. mining companies), mineral rights, employees etc.. Not all Penny Stock companies and scams and fakes, but quite a bit of them are.
There is a good chance that if a company regularly updates their financials on OTCmarkets.com, they regularly abide by the rules by completing filings, they keep their share structure current and accurate, update their shareholders frequently and do all the right things; that this company might be a legit company with a real product, real employees and real revenues. But on the other hand, some of this filing information can also be faked and once again fluff-information can be provided to steer good investors into bad ventures.
Generally speaking, if the company does a good job on filings, updates, news, stays current etc.. the company might be good. If on the other hand, the company doesn’t submit regular filings, the certifications and licensing for day-to-day operations of the business are not renewed, constant dilution of shares is happening, constantly paying off debt by selling shares, doing reverse stock splits etc.. then chances are that this company might not be good and you should steer clear of them. Quite a bit more information like this will be covered on the rest of this “how to invest in penny stocks for beginners” extreme guide.
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