how do penny stocks work?

[joesephsonbill]

does anyone have any good websites that explain how these work? or can you just explain to me now.

[Asa K]

Penny stocks are stocks that have prices that are very small...for example, a penny. They are very risky, and touted in get rich quick schemes often.

Penny stocks are lucrative to some since a stock that costs 0.01 can easily go up to 0.02 or 0.03 a share, giving you a huge return in a small amount of time. The problem is, it's extremely hard to judge what a penny stock will do, since it's usually a crappy company. I know of no great investors that use penny stocks. If you want to get into REAL investing, study Benjamin Graham and Warren Buffett.