This is my experience solely:
Before I begin, please consider this as a disclaimer that my experience is solely mine and the regrets and the associated pain is mine and the reason I am putting it up in the public domain is not because I am cringing and cursing myself alone but because I have a right to express myself about an experience that I had because democracy and the twin reason is to make the others aware of I went through so that they can safeguard their interests.
Last year, I handed over my stock portfolio to a consultant:
He went through the entire folder and advised me to invest in penny stocks. Now for the uninitiated, a penny stock is one where the price of the stock is less than $5. So, the value of the stock per se is small but the volume is much bigger.
To make the point clearer:
Say, company A which is doing very well in the stock market has a stock price of $2000 for hypothesis sake. Another company that is a newbie has its stock price at $4 only each. Now, if you have $10000 to invest in the stock market, you will either get only 5 shares of Company A or if you go for the relatively new company, you can buy 2500 shares.
So good so far?!
But the problem is that penny stocks are high-risk ones. You may have heard stories about people making it big with investing their money in top 20 penny stocks but one thing to keep in mind is that for every one person successful with penny stocks, there are at least scores of people who are losing money on them. But you can invest in them if you have studied the risks and you are indeed a high-risk investor. You must be able to absorb the losses in case there is.