| Do you know what a penny stock really is? Odds | | | | low-priced stock? If Warren Buffet considers Yahoo! |
| are, you've been subjected to wrong information. | | | | (NasdaqGS: YHOO) at $22 per share to be low-priced |
| Today, I'll shed some light on the situation. | | | | stock, is Yahoo! now a penny stock? Of course not. |
| Look through the Internet and you're bound to come | | | | As you can see, these loose translations lead to all |
| across at least 6-10 completely different definitions | | | | sorts of problems. |
| for penny stocks. For instance, one description I | | | | If we're to look at the market as a whole and adjust |
| found said that penny stocks were simply "highly | | | | for inflation, we can see that the U.S. Securities and |
| speculative" stocks. Oh? So if I were to buy a stock | | | | Exchange Commission definition of penny stocks is |
| trading at $50 per share that's "highly speculative" it | | | | pretty accurate. We can also see that the definition |
| would be a penny stock? I don't think so. | | | | penny stocks is a dynamic one and subject to a little |
| Many definitions seemed to be stuck on the idea that | | | | interpretation-saying that are only stocks under $1 is |
| penny stocks are any stocks selling for under $1. This | | | | well beyond the bounds and incorrect. |
| is not correct either. First of all, this definition fails to | | | | According to the SEC, a penny stock generally refers |
| account for inflation. Think about this, if a penny | | | | to stock of very small companies trading under $5 |
| stock were anything under $1 in 1970 then, adjusting | | | | that may be traded on the OTCBB, in Pink Sheets or |
| for inflation, the definition in 2008 would be anything | | | | (and this is what many miss) via securities exchanges |
| under $5.60. | | | | and foreign securities exchanges. |
| Yet other descriptions incorrectly define penny | | | | There are many famous companies that were once |
| stocks simply as "low-priced" stock. What is | | | | penny stocks. And I'll leave you with one-Microsoft. |