What Are Penny Stocks?

What are penny stocks? Surely you've heard about them before. Penny stocks are pretty hard to miss these days. They account for 63% of the shares volume in the NASDAQ and 78% in the New York Stocks Exchange (NYSE). But sometimes, even the most ubiquitous terms are not properly defined. The same can be said about penny stocks. We hear about them a lot, but we are still left with that nagging question in our minds: what are penny stocks, exactly?

So, what are penny stocks? Let's look at it in the eyes of the issuer. By their very name alone, penny stocks are stocks exchanged in small values. But this can be quite misleading, as these stocks are usually issued, bought, and sold by the thousands. Imagine a company that wants to go public, with a 1 million dollar capital to boot. They could issue 200,000 stocks for $5,000 per share. This would be a pretty difficult sell. But what if they issue a million stocks at $1 per share? Then they would be able to sell them faster.

But what are penny stocks in the eyes of the buyer? Penny stocks can be defined in a lot of ways. That's one thing perplexing about them. They don't seem to have a universal definition. Some define what penny stocks are based on the amount of each share. Some define what penny stocks are based on the marketing capital of the issuing company. While some define what penny stocks are based on stated categories. But what unifies all of these, in the eyes of the buyer, is the potential ability of these penny stocks to spike up their value and rake some great profits.

And what are penny stocks in the eyes of the seller? Penny stocks are valued shares that have increased in value, and must be sold for profit. It's the basic rule of business: sell when it's hot and but when it's not. Hot penny stocks should be sold before any decrease on value is observed; it's as simple as that.

What are penny stocks in the eyes of a bustling industry? Penny stocks are opportunities… opportunities for many people to make an honest and decent living out of this game based on educated speculation. Some even find it fun, what with the many studies that can be made in this field and the anticipation in waiting for your investments to experience a boost in value. Penny stocks are great investments, high risks but capable of yielding high profits. It's a field worthy of your time, efforts and commitment.

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