Why do so many people invest in penny stocks?
Thursday, July 29th, 2010 at
1:12 am
I know a few traders that swear by these things. I’m not talking about rookies; I mean semi-experienced traders with like 75% of their portfolios devoted to OTC companies. Most of them never make any profit what-so-ever. I understand that some folks when they are starting out will think pennies are a "good buy" and the company "seems like a good idea" but usually after a month or two they realize cheap stocks are a shot in the dark.
All good answers!
Filed under: Retirement Planning
Like this post? Subscribe to my RSS feed and get loads more!
I think it’s a highly optimistic attitude and personal greed, that one could double or triple their money in short time.
Penny stocks are a shot in the dark because the company usually faces liquidity issues and have very limited reputation. But hey, the stock could shoot up just on one snippet of good news…unfortunately, it could go the exact opposite just as easily.
The same reason people play the lottery
because it’s not investing it’s gambling:People like to gamble.
When a 100 dollar stock goes up 10 cents it’s no big deal. When a 10 cent stock goes up 10 cents it has doubled. They forget that it going up 10 cents is highly unlikely.
Others get turned on by the idea of buying 10,000 shares of something.