Penny Stock Investors
To provide details on the persona, demographic, or psychographic profile of green energy penny stock investors or penny stock investors in general. Information regarding what drives the investors, what interests them, and what encourages them to buy specific penny stocks will be provided.
- The typical penny stock investor "loses a few hundred bucks per year playing the OTC market, but a few lose much more." Investors lose about 18 billion annually in penny stocks. Based on an SEC study, "the median penny stock investor holds their stock for 16 days and realizes a return of -13.4 percent."
- SEC found that penny stock volume is growing despite the low investment returns. This is their hypothesis: "The first hypothesis is that OTC (over-the-counter stocks such as penny stocks) investors are simply gambling since OTC stocks have a lottery-like distribution of returns. The second hypothesis is that investors are poor at estimating return probabilities of OTC stocks because these companies tend to provide fewer disclosures. Most academic studies provide empirical evidence more consistent with the second hypothesis."
There is a group of penny stock investors who are amateur investors.
Amateurs or Newbies
- Amateur penny stock investors are those who are new in the field and the majority of them are college students.
- They turn to the internet as their guide when making investment decisions. Since March 2020, "online communities like r/RobinHood and r/RobinHoodPennyStocks on Reddit have gained around 70,000 and 20,000 members respectively." These online communities reveal posts from newbie investors, "including those who specifically label themselves as college students, looking for advice and sharing their gains."
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