InvestED: The Rule #1 Investing Podcast
440- Penny Stocks part 2
Oct 17, 2023
The hosts discuss the risks and potential gains of investing in penny stocks, emphasizing the importance of understanding risks in ventures like franchising. They explore the impact of internet rumors on stocks and cryptocurrencies, using examples of the GameStop incident and a billion-dollar international scam. The chapter also delves into the concerns with buying partial shares and reflects on the previous episode, hinting at further exploration of finding and evaluating penny stocks.
37:04
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Quick takeaways
- Penny stocks offer potential for high volatility and quick price movements, making them enticing for small investors seeking significant returns in a short period.
- Caution is advised when considering investing in penny stocks due to limited financial data, prevalence of pump-and-dump schemes, price manipulation, and dissemination of misleading information via the internet and rumor forums.
Deep dives
The Appeal of Penny Stocks
Penny stocks are enticing for small investors due to their low share prices, allowing them to purchase more shares with limited funds. Additionally, the potential for high volatility and quick price movements can offer the opportunity for significant returns in a short period. However, it's important to note that many people are attracted to penny stocks as a form of gambling, seeking to take advantage of speculative price movements. Manipulation and rumors can heavily influence these stocks, and caution is advised when considering investing in penny stocks.
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