Have you heard about pink sheet stocks? Do you know how they are traded?
The pink sheets are a listing of over-the-counter stocks that works differently than an exchange. Many investors get a bit uneasy on the subject as they tend to be small, unproven companies. However, with the right knowledge and diligence, there is great opportunity amidst the risk associated with pink sheet stocks.
I created this infographic to give you an in depth understanding of the types of pink sheet stocks, how they trade and what information investors should know!
Click on the image below for a larger view.
The biggest appeal that pink sheets carry for investors is their low price. These stocks are attractive to those investors who seek get in on the ground floor of an up-and-coming company or who have hope in a company that was once great and shows promise of a rebound.
The biggest drawback to pink sheet stocks is the lack of transparency, volatility and lack of a stringent regulatory agency to protect investors. However, for investors willing to perform their own research and due diligence, these stocks can provide significant returns.
With the addition of the new tier system, there is hope for investors, as they can avoid those pink sheet stocks whose extreme risk is unlikely to provide any opportunity aside from losing their buyer’s investment. This is also helpful to legitimate companies listed in the pink sheets to differentiate them from the pack.
More than many investment vehicles, pink sheet stocks bear risk. However, for those diligent investors with nerves of steel and an eye for potential, pink sheet stocks represent an area of potential gain worth considering.