Why You Should not Buy Penny Stocks
Penny Stocks are considered to be easy to get rich strategies for novices as well as some experienced investors. The company on the market is blue-chip companies or small companies. Blue-chip companies operating mature and stable business. But small companies are found to be more attractive to investors because they are likely to get huge, incredible wealth. The negative reasons for investors to buy a penny stock are:
The stock is cheaper and will be faster – People tend to avoid buying "high prices"; larger or blue-chip stocks think they are Limited appreciation range and stable return is not attractive enough. The prospect of zooming is more tempting. So they feel that if they have a certain amount of these pence shares, they will have a brighter future.
But the reality is that the absolute value of the stock price has no effect on the investor's return. Earlier, when the stock was not dematerialized, there was the minimum number of hands to buy stocks, which made them outside the range of small investors. Therefore, it is necessary to have a good understanding of the financial market before making an investment decision.
Penny stock faces the biggest price manipulation – Pumping and dumping policies are rampant here. The sponsors of these small listed companies often collide with brokers to raise their share prices through large-scale promotional stunts and announcements. This attracted the attention of investors. As the stocks, when the amount required to sell a penny, they eventually dumped in retail investors. Therefore, it is unwise to simply rely on brokers' advice.
Attractive Registration of Profits for Pamphlets – These are often familiar details of the temptation to investors, and in reality these small companies have registered for years of loss. Investors must learn to distinguish between real and false. But investors can not choose to validate any of these information because they have little resources to do so. They once again rely on them and brokerage firms.