The Perils of Penny Stocks: A Risky Investment to Avoid

Penny stocks, which trade at $5 and below, can be highly risky and dangerous investments. These low-priced stocks are often traded on over-the-counter equities markets, which have less regulation and transparency compared to mainstream stock exchanges. Penny stocks are susceptible to manipulation and fraud, with fraudsters taking advantage of unsuspecting investors. The lack of liquidity and higher volatility make it difficult for investors to sell their shares. Notorious penny-stock scams, such as the one orchestrated by Jordan Belfort and depicted in "The Wolf of Wall Street," have defrauded investors out of millions of dollars. Investors should exercise caution and conduct thorough research before investing in penny stocks.