Penny Stock Mania: What, Me Worry?

The word unprecedented is often overused because most things are not. However, this economic era has forced me to use the word repeatedly because so many events are literally unprecedented.

The latest example is the newfound mania for penny stocks which is depicted in the chart below.

One trillion (sic) shares of penny stocks traded in December. Penny stocks have always been the most speculative corner of stock markets, so the unprecedented (that word again) enthusiasm for penny stocks provide yet another indication of the “irrational exuberance” that have gripped markets.

The disconnect between markets and current economic conditions are (I won’t say it).

Extreme caution is warranted.

We anticipate significant volatility by markets which will produce significant risks. However, we are also excited by the prospect of great investment opportunities in the months and years ahead.

We discussed these in our January issue and will update our investment stance in the upcoming February publication.

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