|
|
Penny stock |
|
|
|
 Home Site Map Add Term Search About Us Contributors |
Penny stockUsed in the context of general equities. Stock that typically sells for less than $1 a share, although it may rise to as much as $10/share after the initial public offering, usually because of heavy promotion. All are traded OTC, many of them in the local markets of Denver, Vancouver, or Salt Lake City.Penny stock Similar MatchesPenny stocksPenny stocksIn the US, stocks which normally sell for $1 or less and traded in the over the counter market. They are highly speculative since a relatively small increase or decrease in price can result in significant gains or losses. Penny sharesPenny sharesLiterally, any share costing less than 100p, but in a recent paper on the subject, the Financial Services Authority designated penny shares as shares which have limited liquidity - in other words, that are hard to buy and sell in quantity without moving the price. Specifically, the FSA singled out those with a spread of 10% or more between buying and selling prices.The FSA definition highlights one of the dangers of penny shares: in order to make a profit on them, you need a significant rise in share price just to cover the wide spread. There is no evidence that penny shares as a class have any more potential to appreciate in price than higher-priced shares. The reason is simple: Price in itself is not a measure of value. It only becomes a measure of value in relation to other factors, e.g. price-to-earnings or price-to-assets.Novice investors often make the mistake of equating low share price with value. That's a fundamental error. A share costing £10 can easily be better value than one costing 10p, if the Net Asset Value per share of the two companies is £12 and 5p respectively. What matters is the size of the 'cake' to which the shares relate, and the number of shares in issue. Penny MatrixPenny MatrixA way to prioritize a list of options by pooling the opinions of raters. Raters "spend" their pennies across several options with the sums of "money spent" indicating a priority weighting and ranking to the options. |
|
|
|