The unwashed masses of newbies fall for The Cheap Stock Myth. That bias probably dates to when people got their stock info from newspapers which only displayed prices for NYSE issues which had a floor of about $2 and a maximum price of about $100 (when they would split). Therefore newbies assumed there was a floor and a ceiling. That is, it appeared that a $2 stock could only rise and a $100 stock had no upside.
Some newbies assume that great growth stocks like Microsoft were once OTC penny stocks. Actually MSFT IPO'd at $21 a share in 1986 and quickly passed $100. MSFT immediately traded on the NASDAQ. After the IPO, MSFT was almost always between $50 and $140. It soared and split, and then soared and split again... and again. Just as Boeing doubled from about $150 to $300 last year.
I can think of several reasons to AVOID low priced stocks. Almost all scam investments are issued in low denominations and are kept cheap with splits. But be warned there are exceptions. Enron reached $90 before collapsing.
Three of my key rules for avoiding scams: 1) Shun low priced stocks. 2) Stick with the NYSE (or extremely large cap NASDAQ) and 3) Only buy stocks audited by Big Four firms. Such a stock universe will still give you hundreds of investments to choose from. My rule wouldn't have saved investors from Enron. But you'd avoid almost every almost every other scam in the past 75 years. You can protect yourself from such rare scams by diversifying sensibly. Any stock can fail... (see GE, right now). I've never lost a cent in a stock scam, but a microscopic few are almost impossible to detect. Therefore own at least 10 stocks (when starting off), or better yet a mixture of funds and quality issues.
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Well, I know LMT is hiring a lot of engineers. Just as BA is doing.
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Because the Good Life is Just a Pump or Two Away
