| Penny stocks lack an organized market and are | | | | market intelligence on penny stocks by alternatively |
| mostly traded outside exchanges, unlike large and | | | | monitoring pink sheets and over-the-counter bulletin |
| medium cap stocks. Further, not much information is | | | | board (OTCBB) reports, which are published on a |
| publicly available on related companies' financial | | | | daily basis. It used to be that companies listed on the |
| performance and their management. Because of this | | | | pink sheets and OTCBB were not required to disclose |
| information vacuum, penny stocks mostly languish in | | | | details on financial performance and other key |
| obscurity, without drawing much attention from | | | | aspects of their business. However, subsequent rules |
| investors. As a result, trading in penny stocks is also | | | | framed by the National Association of Stock Dealers |
| listless most of the time. | | | | (NASD) have necessitated disclosure of key |
| However, these stocks sometimes turn out to be big | | | | performance for listing on the pink sheets and |
| money-spinners for their buyers after their growth | | | | OTCBB. Now, penny stocks listed on the OTCBB |
| potential is discovered by investors and prices start | | | | have to report to the government as well. |
| soaring high in line with their fundamentals. Since | | | | There are some penny stocks of which, although |
| these stocks are fairly undervalued, price increases | | | | traded on the OTCBB, details are not shared by the |
| are very sharp after investors start lapping them up. | | | | corresponding companies. Details on buy and |
| Identifying growth potential of a penny stock before | | | | purchase quotes of such shares can, nevertheless, |
| the markets wake up to it is not difficult, though it | | | | be found from NASDAQ. This is because NASD rules |
| requires effort. | | | | require reporting quotes to NASDAQ. |
| Anyone planning to invest in penny stocks can collate | | | | |