To reply briefly.
As you know, there are the two US exchanges as well as the Over the Counter (OTC) Market:
As for the New York Stock Exchange & the American Stock Exchange (AMEX), it is generally acknowledged that NYSE stocks are of good, substantial companies (at least when they were first listed). The exchanges facilitate the transfer of shares from the seller to the buyer.
OTC trading system consists of a dealer network referred to as NASDAQ. This is an association of merchants who will buy from you and sell to you shares that they trade. In NASDAQ, there is one tier of stocks belonging to the National Market System (NMS) consisting, generally, of established companies, more or less. In addition, NASDAQ (and AMEX also has this) has a Small Capitalization group which are development stage companies which are financially much less solid than the former. Companies have to qualify (size, financial reporting) to be traded on any of these.
Then there are companies whose shares have been or are being sold to the public which do not meet the criteria for inclusion in any of these groups. But brokers can still sell them. These are the pink sheet or bulletin board stocks. Their financials are not regularly reported or available and Price and volume data are not well-maintained or easy to get (The Net has been a great help though for individuals to get the data of those that do report). Occasionally foreign companies with great assets might be traded this way UNTIL they go through the formalities required to obtain listing on an exchange or NASDAQ. But, for the most part, these are shares of once-thriving companies now defunct, merely the shell of a company that went through bakruptcy, etc. Most of the pink sheet stocks being promoted are done so based on a story of what can happen. Some stories are interesting but we pay dearly for not being sceptical!
(I do own shares of THIS pink-sheet stock) |
