Pink Sheets: Advantages and Disadvantages

Yoshimi said: "A company whose shares are traded on the so-called "pink sheets" is commonly one that does not meet the minimal criteria for capitalization and number of shareholders that are required by the NASDAQ and OTC and most exchanges to be listed there. The "pink sheet" designation is a holdover from the days when the quotes for these stocks were printed on pink paper. "Pink Sheet" stocks have both advantages and disadvantages. [B]Disadvantages:[/B] Thinly traded. Can make it tough (and expensive) to buy or sell shares. Bid/Ask spreads tend to be pretty steep. So if you bought today the stock might have to go up 40-80% before you'd make money. Market makers may be limited. Much discussion has taken place in this group about the effect of a limited number of market makers on thinly traded stocks. (They are the ones who are really going to profit). Can be tough to follow. Very little coverage by analysts and papers. [B]Advantages:[/B] Normally low priced. Buying a few hundred share shouldn't cost a lot. Many companies list in the "Pink Sheets" as a first step to getting listed on the National Market. This alone can result in some price appreciation, as it may attract buyers that were previously wary."

AznHisoka said: "[QUOTE=Yoshimi] [B]Advantages:[/B] Normally low priced. Buying a few hundred share shouldn't cost a lot. [/QUOTE] How is this an advantage? So I can buy 10 bucks worth of a penny stock, woohoo! [QUOTE=Yoshimi] Many companies list in the "Pink Sheets" as a first step to getting listed on the National Market. This alone can result in some price appreciation, as it may attract buyers that were previously wary. [/QUOTE] Everyone hopes their penny stock eventually makes it to the national market. This is no advantage either. It's common knowledge."

stockdaily said: "[QUOTE=AznHisoka]How is this an advantage? So I can buy 10 bucks worth of a penny stock, woohoo! Everyone hopes their penny stock eventually makes it to the national market. This is no advantage either. It's common knowledge.[/QUOTE] Pink sheet are for speculators just like HYIPs."