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Today on the news they were saying that some company had a "penny stock" and people should buy it. What does that mean? (link)
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Do NOT buy it. DO NOT. The advertising agent is probably getting a share of the profit made from the penny stock sale.
Okay long story short;
Penny stocks also known as cent stocks are stocks which have a very low value. There is no specific price that a penny stock has to be for it to be labeled as "a penny stock", however in the UK penny stocks are often shares with a value between 1p and £1. In the US penny stocks are between 1 cent and $1. Their value varries and is subjected to speculation which is how economists try and gain anticipated profit from penny stocks.
Okay in other easier english language;
Penny stocks are popular because any increase/decrease in their value results in big profits/losses for the trader.
The company owns stocks of pennies or cents and tries to sell them at certain periods of time.
They want you to buy them because they probably expect their value to decrease, that's why I'm telling you not to.
You're welcome.
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Rating: 5
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That is FANTASTIC advice! Thank you so much for explaining that in a way that made it easy to understand! :)
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