Yahoo Answers is shutting down on 4 May 2021 (Eastern Time) and, as of 20 April 2021 (Eastern Time), the Yahoo Answers website will be in read-only mode. There will be no changes to other Yahoo properties or services, or your Yahoo account. You can find more information about the Yahoo Answers shutdown and how to download your data on this help page.

Anonymous asked in Business & FinanceInvesting · 2 months ago

Why is it risky to invest in penny stocks?

7 Answers

  • 1 month ago

    It's probably not that risky, as long as you keep your investments small enough. Invest hundreds, maybe make back thousands, lose only hundreds. Probably something you need to stay on top of very frequently and trade as quickly as possible.

  • ?
    Lv 6
    2 months ago

    The Risks of Investing in Penny Stocks. Despite the potential for big gains, the risks of investing in penny stocks are more numerous than the benefits. Some of the risks to consider include: Limited liquidity — One of the reasons the price is so low for penny stocks is because of a lack of interest by buyers.

  • kswck2
    Lv 7
    2 months ago

    The NYSE is Regulated, not so much for the Penny Stock market. 

    Pump-and-Dump is common. 

  • 2 months ago

    Any investment in the stock market is a risk.  It's essentially a form of gambling.  But some kinds of stocks are more volatile than others.  Guess which ones penny stocks are?

  • What do you think of the answers? You can sign in to give your opinion on the answer.
  • 2 months ago

    Penny stocks ARE NOT for newbies. Only those with trading experience should consider trading in pennies since they understand the market, the risk and the problems associated with penny stocks.

    Those with securities experience will tell you that you are foolish to start in the market by using penny stocks and those that are in business will tell you not to do it.

    So with experienced investors/traders telling you not to do it, and those that are professional tell you not to do it, and even the Securities & Exchange will not recommend you do it, why do you think you can make any money.

    Before you enter an order for penny stock, read what the SEC has published regarding penny stocks

    The major firms on Wall Street do not and would not trade/invest in penny stocks,

    Professional traders/investors do not and would not trade/invest in penny stocks,

    Experienced traders/investors do not and would trade/invest in penny stocks,

    Those that understand the markets do not and would not trade/invest in penny stocks,

    The Federal Government prohibits broker/dealers from recommending penny stocks,

    The Government tells brokers and the general public not to invest/trade penny stocks.

    Only those with little or no experience in the market believe that penny stocks can be investment vehicles, they don’t know that the majority of penny stocks do not trade in a regulated market, nor do they know what a regulated market means, but that’s understandable since they nor do they know very little or nothing about how a real market operates and are gullible enough to believe whatever they read about such crap.

    If Professional, & experienced insiders along with regulators do not think one should get involved with Penny Stocks, why do you, a newbie, think you should.

    Source(s): from the Street
  • Anonymous
    2 months ago

    Like putting your money on 17 on the roulette wheel in Vegas. 10 losers for every gainer.

  • 2 months ago

    Penny stocks are subjected to far more manipulation than other markets.

Still have questions? Get answers by asking now.