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© Bill Oxford/Getty Images
On the plus side, penny stocks offer a cheap chance to buy a winner; on down side, they can be hard to research and trade. Bill Oxford/Getty Images
- Penny stocks are securities that trade at less than $5 per share, often in unsupervised over-the-counter markets.
- Penny stocks are considered lucrative but high-risk investments: volatile, illiquid, and often subject to scams.
- Investors interested in penny stocks should deal with those listed on larger exchanges and sold by established brokers.
- Visit Insider’s Investing Reference library for more stories.
Penny stocks have become more popular than ever, tempting investors with a low cost of entry and the prospect of significant financial gains. Stories of shares making gains of over 4,000% in just months add to their appeal, and new trading technology makes it easier than ever to enter the market.
But while they can be lucrative,
Calls from clients usually start pouring in whenever stocks take a surprise tumble.
But lately, financial advisers have been getting more calls from worried clients about devastating West Coast wildfires, which this year come amid the worst public-health crisis in a century.
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“We always get a lot of calls after a bear market hits,” said Deron McCoy, chief investment officer at Signature Estate & Investment Advisors, in Los Angeles. “Clients always ask what they should do.”
His advice? Plan ahead before calamity strikes, particularly if you live in spots vulnerable to climate change, which now threatens to make California’s wildfires even worse.
“You need to fix your roof when it’s sunny,” he said.
Well over 4 million acres have burned in California since the beginning of the year, more than double the land burned in any prior year, according to the California Department of Forestry and Fire Protection.