On any given day, there are a dozen or more Blue Sphere-like stories of tiny, profitless companies that mysteriously go from obscurity to viral sensation. Lately the frenzied pace of boom and bust in these penny stocks has started to drown out all the other forms of speculative mania in the pandemic-era market. Call it another froth marker -- retail traders beset with mass psychosis amid zero-commission fees and zero benchmark interest rates -- to be filed alongside the GameStop Corp. saga, the three-fold rally in cryptocurrencies, the SPACs that are minted daily and the record highs being plumbed by major equity indexes.
“People start to look around and say, ‘What else can I do with my money?’” said JJ Kinahan, chief market strategist at TD Ameritrade. Rules regarding trading over-the-counter securities vary broker to broker, but they can be purchased on any of TD Ameritrade’s trading platforms for a fee. “Those would be one of the ones on the top of my list to say to people, ‘Please understand the risk that you’re taking going in there.’ I learned early in life, if there’s a lot of upside, there’s a lot of downside. People just might not want to tell you about the downside.”