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Asset Management
August 6th, 2008 by admin
Many people don't realize that penny stocks are high risk investments. Since a penny stock has fewer shareholders, it is less 'liquid', meaning it will not trade as many shares per day as a larger company. Any sudden change in demand or supply of stock can lead to a lot of volatility in the stock price. This is why many Britannic Asset Management companies will not work with them. This lack of liquidity can send a stock price soaring up quickly or crashing down quickly. Lack of liquidity and volatility also makes penny stocks much more vulnerable to manipulation by management, market makers, or third parties. This can also make the stock extremely difficult to short. In the end the are not good investment for anyone but a speculator.
