Why are penny stocks bad?
Most penny stocks are not good values, the companies lack decent fundamentals in their balance sheets, they are usually heavily in debt which means the company has little or now value to them. Very few penny stocks pay dividends since they lack any earnings to pay such. Most penny stocks are not profitable. The market and the market participants place values on companies by either buying up the price of the shares or lowering the price of a company by selling the stock rather than buying (buying drives the price up, selling drives it down). Therefore those that are knowledgeable in the market put little value on penny stocks. Granted penny stock don’t have much down side, many do sell for less than a dollar, and some sell for less than $,01 (these are called sub-penny stocks). Most penny stocks trade in the OTC market which is not a regulated market, there are no true market makers that are required to take positons, or specialist who must support the market price. Since the market is
