Skip to main content

Investing in Penny Stocks Has to Be the Dumbest Thing on Wall Street

A little risk is healthy, but with some penny stocks it's just plain dumb.

Many penny stocks are highly volatile, and there's often little guarantee the company behind those stocks is legitimate. A little risk is healthy for your portfolio, but with many penny stocks, it's just plain dumb. 

Penny stocks have become a breeding ground for pump-and-dump schemes that artificially inflate a holding's value before selling out. The fraudster turns a huge profit, but the investor is often left with nothing.

And yet blissfully unaware investors flock to the space, hoping to make millions out of a small initial investment. The internet is rife with entrepreneurs who promise to turn your $500 into $1 million trading penny stocks alone.

Scroll to Continue

TheStreet Recommends

But a simple Google search of "penny stock fraud" narrowed down to the last year yields scores of reports of criminal activity, indictments, lost fortunes and jail time related to super-small-cap stocks. If you're still hoping to make your fortune in penny stocks, you're one of the dumbest on Wall Street.