Knowhow-Now Article

Penny Stocks: Are Penny Stocks Legal?

They don’t trade on the main stock exchanges. They have not been approved by the SEC, but nor have they been disapproved by the SEC. They are labeled as a high-risk investments. Very little is even known about them, and they’re often used in Internet e-mail spam scams. …Are penny stocks even legal to invest in?

Though they may sound scary and they may be unknown, even a little mysterious, there’s nothing illegal about investing in penny stocks. There’s a lot of information out there, a lot of it bad and much of even frightening, but investing in penny stocks doesn’t mean that you are breaking a law.

Tip: Be realistic. You are likely to be very disappointed if your expectations are to have double-digit returns each year.

It means you’re taking a chance, but there’s nothing illegal about that, is there? Yes, penny stocks are considered high-risk investments, but for a relatively small price investors can buy shares and (one hopes) turn around to make a large profit. This is the draw of penny stocks, what makes them compelling.

Also, when you buy penny stocks through a broker, you should get regular updates. Once a month, you’ll get information about your penny stocks and what their status is. This is something your broker has to do if you’ve invested in penny stocks, something that the broker is actually required to do. This lets investors track the progress of their stock.

Tip: Try to find a great investment service you can get connected with. You only need to subscribe to one if you find one that is of high quality.

The only trouble is, sometimes things happen very quickly in the world of penny stocks. These stock infrequently trade, and when they do trade they are not traded through the well-known and established stock exchanges. This makes is hard to both buy and sell penny stocks, so some investors are afraid of getting “stuck” with a stock that they can’t unload.

However, a stock’s risky nature doesn’t make it illegal, or even a bad investment. There are many things that are risky (like driving), but many people don’t let high risk stop them. In the world of stock investing, there is often risk involved. Perhaps penny stocks are considered riskier than some, but at the same time there is great potential to make a lot of money by investing in these penny stocks.

Tip: Companies with high returns are more appealing to investors, rather than ones with good management. Management changes hands often, while the economic competency of a company does not.

Penny stocks are low-priced, shared of companies that are generally on the small scale. These stocks are traded “over-the-counter” rather than on public exchanges, and this is why many investors know very little about penny stocks in general. To find more information about penny stocks, you can talk to your broker or do a little research in business journals and the like. There is information out there, and there are investment opportunities available. It’s just a matter of finding the rights ones for you.

If you’re considering an investment in penny stocks, it’s okay. Risky, yes. Mysterious, definitely. Potentially big? Sure. But illegal? No, not at all. At least right now, penny stocks are traded completely legally and under the guidelines of the SEC. Investing in these stocks can be a little exciting and a little dangerous, but you won’t wind up in jail.

Comments
Order by: 
Per page:
 
  • There are no comments yet
   Comment Record a video comment
 
 
 
     
Related Articles
Investing in penny stocks can be a rewarding, albeit risky, venture. “Penny stocks” is a term used to describe stocks trading for under a dollar per share. Penny stocks are traded in “over-the-counter” (OTC) exchanges. (...)
17.08.2013 · From TheAuthor
The term “high-risk investment” sounds scary, doesn’t it? This phrase alone is enough to put many investors off. After all, no one wants to take a risk. The trouble with buying any kind of stock (high-risk of not) is that it’s always a gamble. (...)
09.08.2013 · From TheAuthor
Introduction to Penny stocks: Penny stocks are low priced speculative stocks and these stocks are traded in over the counter (OTC) market. As per SEC (The Securities and Exchange Commission of United States) the maximum price of the penny stocks is fixed at $5. (...)
04.08.2013 · From TheAuthor
Most Internet e-mail users have been subject to penny stock scams. There are more than fifty billion spam messages sent each day, and many of these mention investing in penny stocks. Spam isn’t a very reliable investment source, right? Does that mean that all penny...
02.08.2013 · From TheAuthor
You might have heard the term “penny stocks” in conversations with friends and family. You might have received email promising overnight riches with penny stocks. Perhaps you’ve even received a call from a telemarketer about the latest hot tip. (...)
27.07.2013 · From TheAuthor
Ads
Article Info
1149 Views
0 Subscribers
All Articles by TheAuthor
Sharing Is Good!
Rate
0 votes