Definition of a Penny Stock

I hear the phrase bandied about quite a bit. So let's take a look at how the term "penny stock" is defined by the SEC

You'll have to read the whole thing. It's not based on market cap or on what exchange (or not) it's listed on. But here it is in a nutshell from the SEC page

Here's a warning about the internet and Penny Stocks from WikiPedia that explains what the "Pump and Dump" is:

The unwitting investors then get screwed. So, don't be witless when it comes to investing.

So keep it in mind. Just about any stock under $5 is now considered highly speculative and to be a "Penny Stock" by the SEC.

Discuss please.

The definition works for me.

There are, in fact, some good companies out there trading for under $5/share - and I have no problem discussing them in any forum. My issue comes when people simply post things like "Going higher any day now"... "Great time to get in".... "Don't miss the boat".... with no valid rationale for doing so. Trying to buy/sell based on timing - volume trends - or voo doo..... is strictly gambling. If you want to push a low priced stock - put some reason to inform others (debate) - rather than entice them (pump).....

Of course. Because such small floats are the only ones that can actually be manipulated with small amounts of people.

Try moving a company with a market cap of $75 Billion by saying "its going to the moon"

It won't happen.

It might if they manufacture rockets and have a new contract pending with NASA.... :th_dblthumb2:

True enough. I imagine once in a blue moon one of these companies actually does find undiscovered oil or a cure for a disease. It happens about as often as being struck by lightning, but you never know :)

I remember when it used to be stock under $1. I wonder why they changed it.

Ahh...thanks for the enlightenment. I always assumed a penny stock was anything trading under a buck.

I've seen plenty of sub-$5 stocks go well beyond the $10 range. Not all are garbage.

I wish that this section was here about 18 months ago before I lost $5,000 on penny stocks "pump and dump". And I still have the 3 losers in my portfolio. One of them has potential, but I am eating dirt on the other 2 :(

ahhh, short memory... it was here 18 months ago... full of pumping and dumping..... (Plasticon ring a bell?)....... There was a time when penny stocks were all the rage and it was hard not to make $$ on them (dot com era)... but today, they are what they are.... worse odds than roulette....


To an earlier post.. Microcaps is simply a fancy term for pennies.... since they went out of vogue - somebody decided this term had more panache.... LOL what a F'in Joke!

One look at the big banner at the bottom of the page and it is obvious why the penny stock forum is open for business.