Fiscal Focus

Penny Stocks! By Fiscal Focus | May 15th 2025 At some point, nearly every new investor has stumbled across an ad about stock trading for under $1. The logic is tempting: if this stock goes from 50 cents to $5, you’ve just made a 10x profit. That’s the appeal of penny stocks:  cheap and full of promises. But as with most things that sound too good to be true, penny stocks often come with serious risks.  What Are Penny Stocks? By definition, a penny stock is a stock that trades for less than $5 per share , according to the SEC. These stocks typically belong to small, unproven companies, and most don’t even trade on major exchanges like the NYSE or NASDAQ. Instead, they’re found on over-the-counter (OTC) markets or the OTC Bulletin Board,  places with looser listing requirements and less oversight. Many of these penny stocks often include very small businesses, even those run out of a garage. In other words, penny stocks are usually cheap for a reason. Their companie...

Stratton Oakmont and How Brokerages Really Work By Fiscal Focus | May 07 2025 When most people think of stockbrokers, they picture suits, phones ringing off the hook, and high-stakes trades. But much of that image comes from Hollywood, specifically from films like  The Wolf of Wall Street , which showcased the rise and fall of Jordan Belfort and his firm, Stratton Oakmont . Behind all this, though, is a valuable lesson in how brokerages function and what happens when they’re abused.  Who Was Jordan Belfort? Jordan Belfort founded Stratton Oakmont in the late 1980s. The firm wasn’t located on Wall Street; it was actually based in Long Island, but it became infamous for using aggressive, manipulative tactics to sell, considered, worthless stocks to everyday investors. It made millions for Belfort and his team, but at the cost of destroying many consumers' savings. Stratton Oakmont was a "boiler room" operation. That means a sales floor full of brokers who cold-calle...