| Myth No. 2: All penny stocks are tiny companies with little revenue or profits. There are quite a few energy companies whose stocks trade for under $5, such as Broadwind (Nasdaq: BWEN), which is profitable and growing. There are also companies like Destination XL Group (Nasdaq: DXLG), which also trades below $5 and generated more than $500 million in revenue last year. Sirius XM Holdings (Nasdaq: SIRI) has an $18.5 billion market cap and generated $6.8 billion in revenue last year. It also trades for around $5. Myth No. 3: Investing in penny stocks gets you in before Wall Street's big players. This is partially true. Many mutual funds and other institutional investors have their own rules against buying stocks that trade below $10 or $5. But many others do not have those restrictions. There are plenty of hedge funds and other institutional players that own penny stocks. Myth No. 4: Penny stocks don't pay dividends. Most penny stocks don't pay dividends because many are still young companies in their early growth phase. But some do... Sirius XM pays a dividend. So does Manhattan Bridge Capital (Nasdaq: LOAN), which trades for around $5 and pays a 9% yield. Myth No. 5: All penny stocks are risky. A lot of penny stocks are garbage companies. Many others are priced low for a reason. But there are plenty of quality companies - businesses that are just beginning to gain some traction, undiscovered by Wall Street - that make for great investments or short-term trades. If you trade penny stocks, make sure you understand the risks, the potential profit, why you're making the trade, and what strategies you have to limit your risk, such as trailing stops. Penny stocks can be lucrative as long as you know what's true about them and what's myth. Good investing, Marc P.S. Interested in controlling shares of some of the world's most profitable companies for pennies on the dollar? Go here now. | 
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