Presented by A Series of BAD Investments
To summarize the literature reviewed so far, academic studies find that OTC stocks have unique characteristics. They tend to be illiquid; are frequently targets of alleged market manipulation; generate negative and volatile returns, and rarely transition to a national securities exchange.
---Outcomes of Investing in OTC Stocks by Joshua T. White, Written for U.S. Securities and Exchange Commission, Division of Economic and Risk Analysis (DERA)
What is an ‘Over-The-Counter – OTC’ stock?
Over-the-counter (OTC) is a security traded in some context other than on a formal exchange such as the New York Stock Exchange (NYSE), Toronto Stock Exchange or the NYSE MKT, formerly known as the American Stock Exchange (AMEX). The phrase “over-the-counter” can be used to refer to stocks that trade via a dealer network as opposed to on a centralized exchange. It also refers to debt securities and other financial instruments, such as derivatives, which are traded through a dealer network.
MAJOR INVESTING RISK:
OTC Stocks ask enormously large bids up front and there is always a lack of reliable information to support investments. Basically, you are making a BLIND investment. If you wish to throw a bullseye with the proverbial investing dart, OTC stocks demand that you blindfold yourself, spin around 40 times quickly, and drink three shots of whiskey before tossing your investing dart at the board.
Five Links to Prove that Over-The-Counter (OTC) Stocks are a Bad Investment:
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