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No Luck Picking Up These Pennies

The penny stocks trading heavily in after-hours markets are a sucker's game.

Uh oh, it looks like the penny-stock crowd has taken hold of the after-hours game.

I check in to the site every night to see what's been buzzing, and the disturbing trend of stocks under a couple of smackers garnering all of the volume has just taken hold.

I know that many of you feel the urge from time to time to play in these stocks. Some of you even think that you can get in and out in time to make a few pennies. When I used to trade these stocks exclusively, it was my experience that you will never be able to make any money with them, even if you are on the inside of a pump-and-dump scandal.

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It's one thing when I say I won't touch a


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anymore because of the low guidance (and thanks for announcing that potential Chinese biz after you shook us all out of the stock, guys).

It's another thing to say that I won't touch a penny stock, period. Ever.

Invariably you will meet someone who got in at 22 cents and sold at 88 cents and thinks that will happen again and again. To which I say that you must imagine that the penny-stock game is like any sucker's game.

They want you to win a couple of times. That's part of the allure. That's when they go in for the kill -- and you are the prey. I would rather have you be long my most dependable short, my single least-likely-to-succeed major equity, than be long any of the junk I see trading tonight.

But then again, what you do is your business and what I do is mine. I just don't like to see anybody, anywhere, lose money.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at