When an unsavvy investor blows her money in equities trading.
It's a term referring to people who invests carelessly or takes greater risks than necessary to achieve their desired return.
So...when Debbie hears that inflation will eat away the value of her dollar over time, she decides she wants to invest her money to earn just enough to protect against inflation. Not knowing what she's doing, she throws a bunch of cash into emerging markets and takes a bath on her investment. She's taking a single, untested step into a new world...kinda like a barefoot pilgrim.
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Finance: What is a Penny Stock?0 Views
Finance a la shmoop what is a penny stock? well in England did it be a
farthing stock in Japan yen stock in Somalia put up your hands and give me
your stock stock all right well what do they all have in common except maybe the
Somalian one well their stocks that trade for an extremely low value or [Penny stocks definition appear]
amount of money per share and not necessarily just a penny could be a dime
or 27 pennies but very small amounts and most will define a penny stock as
anything trading under $1 a share why well because then it's value can be [Pennies falling]
described in terms of pennies and because it's living in the delisting red
zone where most exchanges will simply stop trading in the stock unless the
company does a meaningful reverse split ie where they go from 200 million shares
trading at a buck each to having say 50 million shares out there trading at 4
bucks each right the total value the company didn't
change just the number of shares went down by 4x and the value went up by 4x
right well one big element of penny stocks is the cost of trading them and [Man discussing penny stocks]
you see this issue brilliantly illustrated by Leo in the wolf of Wall
Street... but if you're paying 4 cents a share Commission
to buy a share of IBM which trades for like a 150 bucks in change of
share and those four cents are a rounding error but if you're a retail
customer paying five cents a share Commission for a 30 cent stock well your
commission is enormous like some 20 ish percent of the total value spend five
grand buying grappling hooks.com and a thousand bucks of that dough goes into
the pocket of Leo or some other bucket shop player selling you those shares
while penny stocks may seem cheap just because they're cheap per share and if
you believe this kind of math we have this really amazing bridge we'd love to
sell you right here...[Bridge explodes and tumbles]
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