There's no doubt that penny stocks are hot right now, and for good reason. These low-priced shares offer investors a chance to get in on the ground floor of some lucrative businesses without having to invest a lot of money up front.
However, there are a few things you should know if you're considering investing in these types of securities.
First and foremost, penny stocks typically have high risk attached to them. This is because they often trades at very low prices (sometimes less than one cent per share), which makes it difficult for investors to make any real profit from their holdings.
In fact, over 90% of all penny stock transactions fail within the first six months!
Second, penny stocks are notoriously volatile - this means that they can go up or down dramatically in price over short periods of time.
This volatility can be dangerous if you don't have enough experience trading these types of securities or if you don't have plenty of spare capital available to handle potential losses.
Third and finally, penny stocks usually aren't reputable companies - this means that they may not actually possess the assets or financial stability necessary to support sustained growth rates over the long term.