Date: Sun, 25 Apr 2004 09:53:56 CST
From: "BMS" 
Newsgroups: misc.invest.financial-plan
Subject: Re: What are penny stocks?
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	kevj6ObJKKVNO3qIMrLxh+ah5EnUXwSBncEGkXQKnqkIsCfTPODRMw==
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Look at the listings and you will probably see  wide spread between the buy
and sell prices because there are few market makers.

"jm"  wrote in message
news:9AGic.25692$IW1.1243965@attbi_s52...
>
> "John A. Weeks III"  wrote in message
> news:240420041532497391%john@johnweeks.com...
> > In article , jm
> >  wrote:
> >
> > > I am thinking that firrst one is about penny stocks.  Other sites I
saw
> > > called penny stocks stocks that were a few dollars.  I have heard some
> > > people say that penny stocks are "dangerous."  Any good sites about
the
> > > "truth" are welcome. Thank you.
> >
> > Lets use a little Star Trek analogy here.  If you see a stock that
> > is under $5, go to yellow alert, and move away at full impulse power.
> > If the stock is under $1, raise shields and go to red alert, then
> > high-tail it out of there at warp 6.
> >
> > When you see a stock that is this cheap, it means that they have
> > issued too many shares to support a decent stock price, and they
> > don't have the earnings to move the price up to a reasonable price
> > level.  This usually means a very risky new company just coming
> > onto the market, or an old dog of a company that is dying and is
> > nearly dead.  There are a multitude of problems with these kinds
> > of companies, such as being thinly traded (ie, no one to buy when
> > you want to sell), few analysts follow them (ie, they can pull all
> > kinds of tricks and they will not get caught until you fall into
> > the trap), and few people think that they have any prospects of
> > turning around (otherwise someone would buy them out at these
> > low prices).
> >
> > It is better to find a company that has shown a few good quarters
> > of growth.  Altough the growth will eventually peter out, it is
> > far more likely that a growing company is going to continue to
> > grow than a dead company is going to make a sudden turn-around.
> > Value stock pickers might think otherwise, but you really have
> > to know what you are doing to be a successful value investor.
> >
> > -john-
> >
> > -- 
> Thanks.  You mentioned this:
>
> "such as being thinly traded (ie, no one to buy when
> you want to sell),"
>
> I thought that if I owned shares and then said "Sell!" that I *had* to get
> my money for them.  Is this not true?  Second, now that I think about it,
> who is buying them?  Where does the money come from?
>
>
> ---
>
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