Why People Invest in Penny Stocks?
1)Most of the people who buy penny stocks are small traders and investors. They are able to buy more shares in less money compare with blue chips. They can buy few shares of blue chips with capital, but 50-100 times in penny stocks with same capital. 2)They think, if they buy any penny stock at 1 Rs, it can go to 100 Rs also with risk of just 1 Rs. 3)They believe in Buy & Hold Strategy. They purchase stock and retain it for long periods of time, hoping that the stock will reach sky high in future. 4)They carried away by seeing few multibagger penny stocks that moved multi-fold in recent times. So they try to chase another one. Unfortunately, these strategies never give rewards. Investors only buy on hopes and at end it goes completely worthless. Always remember, there is nothing called Low Risk and High reward in Equity market. If you think, stock is available at very cheap price and has huge upside. 99% Chances are the fundamentals are not good if the stock is trading at very low pric
