Pink Sheets Penny Stocks
So what exactly are the pink sheets penny stocks? In a nutshell, they are considered to be the “Wild Wild West” arena of the stock market world. They’re somewhat considered to be a step below the OTC Bulletin Board stocks (if that’s even possible), because with pink sheet stocks, every trader operating in that arena understands the rules of engagement, which are basically non-existent. In other words, with pink sheet stocks, anything goes. Companies on the pink sheets exchange (now formally known as “Pink OTC Markets”) don’t have to be nearly as vigilant to make their books look good, because they simply don’t have the same regulatory pressures breathing down their necks as their bigger counterparts that trade on NASDAQ, NYSE, and so forth. As a matter of fact, I don’t believe there’s even such a thing as being de-listed from the Pink OTC Markets. If that were to be the case with a company, that’s a really sad day. The folklore behind the name “pink sheets” is that the color of the papers that the stock quotes were printed on for these companies was pink back in the day. Now, everything is electronic and paperless so there’s really no grounds for even calling them “pink sheets” anymore, but the name has endured, and nobody really gives a crap when it comes down to it. I have never dabbled in the Pink Sheets stocks, but only because I was too consumed with the OTCBB stocks, which recently I’ve been kind of moving out of as well. I did have one stock trade, however, where I had bought several hundred-thousand shares of an OTCBB stock (sounds impressive, but that’s really not a whole lot of money, trust me), only to see that stock get banished to the Pink Sheets. If a stock ends up on the Pink OTC Markets, it’s almost like being in exile from being in any real kind of stock trading environment—it’s like when Han Solo was banished to the planet of Hoth—it’s really removed from reality.
The thing that makes pink sheet penny stocks so volatile and risky is the fact that there’s very little regulatory oversight for these stocks—again, everyone trading them knows that they’re getting the “mutts” of the stock world. The big advantage of trading them is that they offer fantastic leverage. They’re not too much different from the OTCBB stocks in many ways, but one of the things that kept me from really digging into them is the crappy quotation system they had—I guess that may have changed now since it’s much more of a sophisticated system than it was back when I was first introduced to them. Now I leave them alone out of habit (I never did anything with them back then, so I didn’t ever feel the need to start doing anything with them now), but they may indeed offer something new that I don’t even know about. Back in the day, you could really hang yourself trying to invest in pink sheet stocks because by the time you got the most recent quote, the move had already taken place and you were left holding the bag. So, I knew that the pink sheets penny stocks were really the domain of the insiders and the promoters of the stock who had the advantage of foreknowledge. Nowadays, as I said earlier, I’ve kind of strayed away from even the OTCBB markets, because I’m too busy concentrating on the NASDAQ issues that are out there (and out there by the thousands) that have amazing potential. One of the things I have learned is that regardless of how well you can analyze a chart, an OTCBB stock can truly vanish on you in a heartbeat, and leave you wondering what the heck happened. So now, my efforts have been more focused on stocks on the NASDAQ exchange, especially since AMEX (my old friend) was acquired by the NYSE Euronext (NXT)—man that was really a bummer to me. It was the end of an era. I had SOOOO many stocks that traded on the AMEX that were solid gold. True, the AMEX is still around, but it just feels so much different now. It seems all refined and highbrow now when AMEX used to be somewhat of a “rogue” exchange of sorts. Maybe that’s what’s going on with the pink sheets penny stocks now, though…maybe they’re being transformed into something a little more respectable—yeah, right.
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