Investing in Penny Stocks Has to Be the Dumbest Thing on Wall Street: TheStreet: Investing Strategies

 Published on 14 Apr 2018

Many penny stocks are highly volatile, and there's often little guarantee the company behind those stocks is legitimate. A little risk is healthy for your portfolio, but with many penny stocks, it's just plain dumb.  Penny stocks have become a breeding ground for pump-and-dump schemes that artificially inflate a holding's value before selling out. 

The fraudster turns a huge profit, but the investor is often left with nothing. And yet blissfully unaware investors flock to the space, hoping to make millions out of a small initial investment. 

The internet is rife with entrepreneurs who promise to turn your $500 into $1 million trading penny stocks alone. 

But a simple Google search of "penny stock fraud" narrowed down to the last year yields scores of reports of criminal activity, indictments, lost fortunes and jail time related to super-small-cap stocks. If you're still hoping to make your fortune in penny stocks, you're one of the dumbest on Wall Street.

Pump and dump - Wikipedia

https://en.wikipedia.org/wiki/Pump_and_dump

"Pump and dump" (P&D) is a form of securities fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price. Once the operators of the scheme "dump" sell their overvalued shares, the price falls and investors ...