Expert: Mark Hodge - 6/12/2009

Question
QUESTION: What are pink stocks and are they risky? thanks

ANSWER: Hi Robert,

Pink sheet stocks are stocks that are "penny stocks" not traded through a major exchange, and instead trading over the counter (trader to trader). They are more risky since they do not not meet SEC requirements to be listed on a major exchange, and have less transparency. Pink sheet stocks typically have erratic or weaker volume too and can fluctuate in price or simply go nowhere, without the trends we find with actively traded stocks.

Some traders are drawn to penny stocks in search of fortunes, but very rarely do penny stocks make the moves their traders hope for. Although there can be that diamond in the rough, you typically get what you pay for.

Happy Trading!
Mark

---------- FOLLOW-UP ----------

QUESTION: How do you fell about buying the GM pink stocks right now. I read that when they do get out of BK that they will simply be gone. Is that true and would buy them right now.
         Thanks again

Answer
Hi Robert,

Unfortunately I'm not licensed to offer trading recommendations or specific trading advice. What I would encourage you to do, is to do your research (this is a good start). Bottom-line a company has been DE-LISTED from a major exchange for a reason. There are no guarantees, but if you find a copy that is delisted that you are comfortable with and the trade fits your risk tolerance, it might be something to consider.

I personally focus on stocks that trade on major exchanges.

Happy Trading!
Mark