A warning has been issued by the authority on penny stocks and author of "Invest in Penny Stocks," Peter Leeds, suggesting traders avoid the "easy" stock exchanges, like the over the counter and Pink Sheets markets. Penny stocks can get listed there much more easily, and price manipulation in their shares is often much easier, according to Leeds, which results in more numerous quantities of fundamentally weaker penny stocks, and fewer quality investment options.
Raleigh, NC -- (SBWIRE) -- 03/23/2012 -- Peter Leeds, author of "Invest in Penny Stocks" [John Wiley & Sons], and publisher of the world famous Peter Leeds Penny Stocks newsletter, has issued a warning today for investors to avoid what he describes as the "easy" markets.
Leeds explains that the easy markets include such exchanges as Other Over The Counter and Pink Sheets. With 8,867 and 6,211 listed securities respectively [OTCMarket.com], there is no shortage of penny stocks being traded on these venues.
"The listing requirements, such as costs and qualification, are much lower than more conventional exchanges for stocks," says Leeds. "It is easier for lower quality penny stocks to get listed, and it costs them much less. They are also generally more thinly traded, and of lower price, so these penny stocks are targets for price manipulation."
With a total of about 29,000 trades in 6,211 stocks (some penny stocks, some large cap stocks), Pink Sheet companies sometimes have as little as 5 trades in a day, on average. [PinkSheets.com] The 8,867 stocks listed as Other Over The Counter sometimes trade, on average, as little as 2 or 3 times in a day. [OTCMarkets.com]
"There is no shortage of investors who wants to trade and buy penny stocks, but there is a right way to do it, and a wrong way. Traders in penny stocks need to stick to high quality companies, which represents about 5% of penny stocks, and the first step is to avoid some of these exchanges which are easy to get listed upon."
Leeds and his team never take compensation from the penny stocks they profile, and they never select penny stocks trading on the so-called easy markets for their subscribers.
"I'm hoping investors in penny stocks will head my warning," mentions Leeds. "It's a great way for them to protect themselves, and will open them up to much better odds of finding quality penny stocks that will really perform, by looking on the higher level markets like the OTC-BB, Nasdaq, Amex, and even NYSE."
About Peter Leeds
Publisher of the world famous penny stocks newsletter at http://pennystocks.com, and author of "Invest in Penny Stocks," Leeds is widely followed as the authority on penny stocks. He is a public speaker, has led investment panels and conferences, has written for Forbes, and has been interviewed by top media from Manhattan to Moscow. Subscribers to his newsletter come from six continents, and several dozen countries.