Penny Stocks Investing And Pink Sheets
Author: Ahmad Hassam
Pink Sheets is where most of the penny stocks get traded. However, this small market is just like the Wild West with no rules and no oversight. Do you want to take part in this exciting small market than you should first do your due deligence and research before you decide to take the plunge.Companies traded on Pink Sheets do not have to file financial statements and do not even have to issue an annual report even. Most of these companies are happy being listed on the Pink Sheets and do no plan to move on to the Over the Counter Bulletin Board (OTCBB). Many even may don't have ongoing operations.Now, don't take this to mean that most of these companies are just mom and pop stores masquerading as companies. There are something like 20,000 stocks listed on these pink sheets. These companies have their own reasons to stay on these sheets.The reason for this can be the company's desire for privacy. Getting listed on OTCBB may cause a loss of privacy for these companies as SEC requires to know exactly how each executive is being compensated and how the company owns assets.Many smaller companies don't want to divulge all this information at this stage of their business cycle. IF they are embarking on a new business venture, they might want to keep all of their information as secret. This forces many potential investors from staying away from Pink Sheets.To make matters worse, many market makers charge wide spreads on Pink Sheets. It is not uncommon for a penny stock on Pink Sheets to have a bid of $0.05 and an ask of something like $0.2-0.25. This happens when the market maker feels that the market for the stock is thin. The market maker does not want to buy a stock only to be stuck with it for a long time waiting for a new buyer to show interest. This wide spread is a way to discourage buyers away from this penny stock.But, you can still find many penny stocks on these pink sheets that have a spread of only one cent. So, as an investor if you want trade penny stocks listed on these pink sheets do your research, you many find many hidden gems. Most of these penny stocks have been beaten down to such a low price that they get traded below their book value. So don't hesitate to take part in this exciting opportunity. Just do your research and due deligence!
About the Author:
Mr. Ahmad Hassam has done Masters from Harvard. If you can read an email, you can print cash with these Strignano's
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