# Playing the penny stock market? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [October 12, 2006, 2:00pm UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187 "2006-10-12T14:00:19Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Earthworm\_Jim](https://avatars.discourse-cdn.com/v4/letter/e/f07891/32.png) [@Earthworm\_Jim](https://boards.straightdope.com/u/Earthworm_Jim)\ **Post date:** [October 12, 2006, 2:00pm UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/1 "2006-10-12T14:00:19Z")
I have a little extra cash, thanks to my employer I have an account with etrade, and I like to gamble. Needless to say, the idea of betting on some penny stocks appeals to me. Risky, but potentially rewarding. I’m looking for some tips on getting started. How do I find the stocks trading for (say) under $2.00? How do I go about researching those companies? What are some signals that the stock will go up, what are some red flags? I’m **not** looking for a get-rich-quick scheme. Sure, I’d like to make money. But, as my grandfather liked to say, “Every gambler’s a loser.” ---
**Author:** ![Trunk](https://avatars.discourse-cdn.com/v4/letter/t/87869e/32.png) [@Trunk](https://boards.straightdope.com/u/Trunk)\ **Post date:** [October 12, 2006, 2:09pm UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/2 "2006-10-12T14:09:27Z")
[QUOTE=Earthworm Jim] I have a little extra cash, thanks to my employer I have an account with etrade, and I like to gamble. Needless to say, the idea of betting on some penny stocks appeals to me. Risky, but potentially rewarding. I’m looking for some tips on getting started. How do I find the stocks trading for (say) under $2.00? [/QUOTE] Check the spam folder of your email program EVERY SINGLE MINUTE. If you google penny stocks, you’ll find a million places to talk about them. If you’re looking for solid, legitimate analysis and discussion of penny stocks, you’re probably not going to find it. They’re penny stocks for a reason. They’re also sometimes traded on the pink sheets, and off the boards, so transaction costs are murder and regulation can be suspect. Seriously, I’d rather spend the dough on sports betting or something. At least you have an idea what’s going on. ---
**Author:** ![dalej42](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@dalej42](https://boards.straightdope.com/u/dalej42)\ **Post date:** [October 12, 2006, 2:10pm UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/3 "2006-10-12T14:10:34Z")
I don’t advise it. However, you might start with [pinksheets.com](http://www.pinksheets.com/index.jsp) . Also, see what commission your brokerage firm charges for these types of security purchases. [Here](http://www.otcbb.com/) is the web page for the Over the Counter Bulletin Boards stocks. I’d stay far, far away from anything you get as email spam with “hot stock” picks. Those are usually some sort of pump and dump scam. ---
**Author:** ![guppy](https://avatars.discourse-cdn.com/v4/letter/g/7feea3/32.png) [@guppy](https://boards.straightdope.com/u/guppy)\ **Post date:** [October 12, 2006, 3:01pm UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/4 "2006-10-12T15:01:41Z")
Why buy failed companies? Not a good place to put your money for any reason if you ask me. I would start with [this](http://en.wikipedia.org/wiki/Penny_stock) and then check the [SEC](http://www.sec.gov) website if you still aren’t convinced not to. ---
**Author:** ![Earthworm\_Jim](https://avatars.discourse-cdn.com/v4/letter/e/f07891/32.png) [@Earthworm\_Jim](https://boards.straightdope.com/u/Earthworm_Jim)\ **Post date:** [October 12, 2006, 3:27pm UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/5 "2006-10-12T15:27:14Z")
Hmmm…from the wiki link - > [@](#): > > A lack of liquidity can also make it extremely difficult to sell a stock, particularly if there are no buyers that day. Very well then. I’ll invest my money in more wholesome puruits, like poker night, the track, and the lotto. Thanks for saving me from myself! ---
**Author:** ![RealityChuck](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/realitychuck/32/195_2.png) [@RealityChuck](https://boards.straightdope.com/u/RealityChuck)\ **Post date:** [October 12, 2006, 3:40pm UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/6 "2006-10-12T15:40:01Z")
Good choice. Brokers are required to do everything they can to discourage clients from buying penny stocks, and pushing a penny stock to a customer who hasn’t traded them in the past can cause them to lose their licenses. It sounds good – “The stock is at $1, so if it goes to $2, I’ll double my money” – but there’s a good reason why the stock is so cheap, and the price is manipulatable by scammers. Unless you have money to piss away, stay away. ---
**Author:** ![Trunk](https://avatars.discourse-cdn.com/v4/letter/t/87869e/32.png) [@Trunk](https://boards.straightdope.com/u/Trunk)\ **Post date:** [October 12, 2006, 3:44pm UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/7 "2006-10-12T15:44:43Z")
[QUOTE=Earthworm Jim] Hmmm…from the wiki link - Very well then. I’ll invest my money in more wholesome puruits, like poker night, the track, and the lotto. Thanks for saving me from myself! [/QUOTE] Seriously, if you took $1000 and just placed random bets at the track, and took $1000 and just bought random penny stocks (and paid the associated fees), I’d be willing to bet that after a year, you’d have more money in the horse track account. ---
**Author:** ![dalej42](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@dalej42](https://boards.straightdope.com/u/dalej42)\ **Post date:** [October 12, 2006, 4:51pm UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/8 "2006-10-12T16:51:50Z")
[QUOTE=RealityChuck] Good choice. Brokers are required to do everything they can to discourage clients from buying penny stocks, and pushing a penny stock to a customer who hasn’t traded them in the past can cause them to lose their licenses. [/QUOTE] However, penny stock rules do not apply to non-solicitated transactions. If the client places an order on line for a penny stock, the broker-dealer can execute the order. I’m not sure about e-trade’s web site, but there is probably a link on there with a disclaimer about the risks of these type of securities. ---
**Author:** ![ParentalAdvisory](https://avatars.discourse-cdn.com/v4/letter/p/53a042/32.png) [@ParentalAdvisory](https://boards.straightdope.com/u/ParentalAdvisory)\ **Post date:** [October 12, 2006, 5:44pm UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/9 "2006-10-12T17:44:18Z")
[QUOTE=Trunk] If you’re looking for solid, legitimate analysis and discussion of penny stocks, you’re probably not going to find it. [/QUOTE] > **[Stockaholics](https://stockaholics.net)** > > Top ranked stock market message boards, educational tools and trading resources. ---
**Author:** ![Trunk](https://avatars.discourse-cdn.com/v4/letter/t/87869e/32.png) [@Trunk](https://boards.straightdope.com/u/Trunk)\ **Post date:** [October 12, 2006, 5:54pm UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/10 "2006-10-12T17:54:00Z")
[QUOTE=ParentalAdvisory] > **[Stockaholics](https://stockaholics.net)** > > Top ranked stock market message boards, educational tools and trading resources. [/QUOTE] Can you add some context to the link? Are you trying to support what I was saying with a link to a board called, “[hotstockmarket.com](http://hotstockmarket.com)” and a forum entitled, “Hot Penny Picks, Momentum Stock Picks & More!”? ---
**Author:** ![dalej42](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@dalej42](https://boards.straightdope.com/u/dalej42)\ **Post date:** [October 12, 2006, 5:56pm UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/11 "2006-10-12T17:56:57Z")
Looks like a typical rumor mill board, filled with sock puppets who talk up a stock so they can dump what they own. ---
**Author:** ![NurseCarmen](https://avatars.discourse-cdn.com/v4/letter/n/5daacb/32.png) [@NurseCarmen](https://boards.straightdope.com/u/NurseCarmen)\ **Post date:** [October 12, 2006, 5:59pm UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/12 "2006-10-12T17:59:12Z")
I actually did okay with penny stocks for a while. Until I hit one that the broker basicly refused to sell, and it dropped and dropped and dropped. So 6 months of pretty good luck got eaten up and more by a shady broker. In my experience, avoid the penny stocks. NASDAQ stocks in the 2-3 $ with either an even history or slight incline ended up making me much happier. ---
**Author:** ![Merhouse](https://avatars.discourse-cdn.com/v4/letter/m/b5a626/32.png) [@Merhouse](https://boards.straightdope.com/u/Merhouse)\ **Post date:** [October 12, 2006, 6:04pm UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/13 "2006-10-12T18:04:10Z")
In the same vein as most of the other (well informed) responses, I was going to suggest seeing if you could actually get the physical stock certificate for any penny stock you bought, and if so, buy the one you think is most attractive. It’s likely the majority of its value would be as an object d’art on your wall. IOW, if you’re going to gamble, find a casino 😉 Good luck! ---
**Author:** ![Lamar\_Mundane](https://avatars.discourse-cdn.com/v4/letter/l/85f322/32.png) [@Lamar\_Mundane](https://boards.straightdope.com/u/Lamar_Mundane)\ **Post date:** [October 12, 2006, 6:06pm UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/14 "2006-10-12T18:06:34Z")
If you just want to take a flyer, [CV Technologies](http://www.stockhouse.com/comp_info.asp?symbol=CVQ&table=list) is a Canadian company that has a pretty good track record. I do not currently own this stock, but I have several times in the past, and made good money on it. Their primary product is a cold remedy that sells really well in Canada, and is endorsed by a number of big name hockey types. Positives - We are coming up on flu season, and this coming quarter is usually their best. Last year’s flu season was mild so sales were down, which could mean good comparisons quarter over quarter. They are also launching distribution into the US very soon. Negatives - It has been on a pretty good run of late, and selloffs happen pretty rapidly with this company. It can be hard to find a broker for this if you are in the US. I don’t think ETrade will get it for you. Note: I am neither endorsing the product or advising you to buy it. I just am relating a sucess story I had. ---
**Author:** ![dalej42](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@dalej42](https://boards.straightdope.com/u/dalej42)\ **Post date:** [October 12, 2006, 6:21pm UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/15 "2006-10-12T18:21:07Z")
[QUOTE=Lamar Mundane] It can be hard to find a broker for this if you are in the US. I don’t think ETrade will get it for you. [/QUOTE] It trades over the counter in the US under symbol CVTHF I still don’t recommend penny stocks. ---
**Author:** ![RealityChuck](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/realitychuck/32/195_2.png) [@RealityChuck](https://boards.straightdope.com/u/RealityChuck)\ **Post date:** [October 12, 2006, 7:18pm UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/16 "2006-10-12T19:18:23Z")
[QUOTE=dalej42] However, penny stock rules do not apply to non-solicitated transactions. If the client places an order on line for a penny stock, the broker-dealer can execute the order. I’m not sure about e-trade’s web site, but there is probably a link on there with a disclaimer about the risks of these type of securities. [/QUOTE] True, but they’re supposed to hand over a bunch of documentation filled with warnings – more than just a disclaimer, but a document that points out all the disadvantages – and have the buyer sign it. [Here is an online version.](http://www.speedtrader.com/pennystocks.php) Note the second paragraph: it’s clear and concise. ---
**Author:** ![Rysdad](https://avatars.discourse-cdn.com/v4/letter/r/7cd45c/32.png) [@Rysdad](https://boards.straightdope.com/u/Rysdad)\ **Post date:** [October 13, 2006, 1:08am UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/17 "2006-10-13T01:08:13Z")
[You could even buy stock in a major airline.](http://quotes.nasdaq.com/quote.dll?page=charting&mode=basics&symbol=NWACQ&selected=NWACQ) I’m not sayin’; I’m just sayin’. ---
**Author:** ![dalej42](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@dalej42](https://boards.straightdope.com/u/dalej42)\ **Post date:** [October 13, 2006, 2:18am UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/18 "2006-10-13T02:18:52Z")
Delta Airlines, DALRQ, also trades over the counter now. ---
**Author:** ![dalej42](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@dalej42](https://boards.straightdope.com/u/dalej42)\ **Post date:** [October 13, 2006, 2:24am UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/19 "2006-10-13T02:24:01Z")
Delta Airlines, DALRQ, also trades over the counter now. ---
**Author:** ![Frank](https://avatars.discourse-cdn.com/v4/letter/f/3d9bf3/32.png) [@Frank](https://boards.straightdope.com/u/Frank)\ **Post date:** [October 13, 2006, 2:31am UTC](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187/20 "2006-10-13T02:31:36Z")
[old joke] Q. How do you get a small fortune in penny stocks? A. Start with a large fortune. [/old joke] [Next page](https://boards.straightdope.com/t/playing-the-penny-stock-market/376187.md?page=2)