Pink Sheets a Remedy for Pink Slips?
by Chaz Bähn
New York—The past months have brought good news from many sectors of the nation’s economy. Home sales were up 9.6 percent in July, unemployment fell to 9.4 percent, and auto sales jumped by 700,000 thanks to the federal Car Allowance Rebate System (CARS). The stock market has proven especially strong of late, surging 40% above the year’s low. As the economy shows signs of turning around, the 14.5 million people still without work are loathe to miss the upswing.
Shares of monoliths like McDonalds and Coca-Cola have remained steady during the recession and promise future growth, but few among the unemployed can afford these fifty-dollar stocks. Instead, people are turning from Wall Street to Wall Alley and the little-known Pink Sheets.
Operated by Pink OTC Markets, Inc., the lightly regulated Pink Sheets represent a more swashbuckling alternative to SEC-registered stock exchanges such as the NASDAQ or NYSE. The market’s securities are recognizable by their .PK suffix and are comprised of both fledgling and prominent names. Such recent tumbling titans as Washington Mutual and General Motors have fallen to the Pink Sheets as a part of the bankruptcy process. At last close these traded at $.157 and $.768, respectively.
Neither of these companies would seem a wise investment under normal circumstances. Washington Mutual has failed and been sold off to JPMorgan Chase, and GM has only just emerged from bankruptcy. Additionally, the SEC has pronounced the Pink Sheets as ranking “among the most risky investments” due to the system’s foggy business practices. But the Pink Sheets’ sandy-bottom prices have remained irresistible to some.
“When I saw GM trading for $.27,” said Cuthbert Davies, proprietor of Gunning Gaily in Jacksboro, Texas, “my first thought was, ‘Serves the bastids right!’ But then I saw the opportunity to get back at Wall Street for what they done to my retirement. I unloaded a case of M4 carbines to some gentlemen south of the border and snapped up GM. I now own over 400,000 shares—401k, to be exact.”
Observers on the sidelines are finding poetic justice in this new trend. “Given all that Wall Street stripped from Main Street the past few years—and I’m talking down to its skivvies—it’s only proper the common people get their piece as things turn around,” said Jarmuth Jackson, Economics Chair at Brandeis University. “With these penny stocks money can vanish as quickly as it grows, but these Desperate Debbies and Dons only see the dollar signs. And I hope they get them. But just between you and me, I won’t be moving my money into shares of WAMUQ.PK any time soon.”