Most investors are weary of the more against the bulletin board (OTCBB). That is understandable, considering the number of bankruptcies, shell companies, and lists that occur in more markets. But there is a large misconception that is widely shared among investors: that no over-the company has to report current financial information. Such is the case with the Pink Sheets, but not so with the OTCBB.

You see, before 1990, the OTC stock market was a wild west show. Not complete lawlessness, but close to it. Therefore, this year the SEC began in the counter bulletin board as part of the Penny Stock Reform Act. The OTCBB’s main purpose was to achieve more and the last contribution to the sale of information. In 1999, the OTCBB had evolved to the point that all companies had to report regular financial information. This distinguishes it from others, specifically the Pink Sheets, which have no reporting requirements.

There is no requirement for Pink Sheet companies. They do not have to submit regular financial reporting and the present (despite a recent classification system that is slowly changing), do not have a minimum market capitalization requirement, and that certainly does not have to pay the couple hundred thousand dollars only to be traded on a major exchange.

The OTCBB, on the other hand, is a much stricter in the Pink Sheets. More Counter Bulletin Board companies have to keep up with the periodic financial reporting. This really makes all the difference in the world.

Here’s an example:

A company is traded over the Pink Sheets, and Company B is on the OTCBB. Both companies issuing press releases claiming to be “the transition of their businesses.” One company actually depressions in a state of society, because nobody has to know what is happening there. Whereas Company B has to submit quarterly revenue. If not OTCBB added a dunce cap (or in this case the letter “E” symbol at the end of the Company), which immediately tells investors that the company is not showing enough corporate responsibility. This can make or break the investment. People invest in a company are out of luck. Company B investors can exit before things get too difficult.

But that does not explain why OTC companies are even worth investing in. There are two reasons to get involved in the OTC market …

The main reason most OTCBB investors keep trading these securities is the profit potential. Obviously, a $ 300 billion Blue Chip can not double in size too easily. That does not give investors too much work. U.S. $ 3 million company can double in size overnight without flinching. You do not have in your portfolio?

The second reason is also a very clear one. Because many of these small companies are working on a much smaller scale, the general attitude of the global market is very small for them. There are almost never large institutional investors or large mutual fund managers pulling money in and out of these companies. These two groups of investors are more interested in the macro market sentiments than what companies are doing. Therefore, bear markets, it is possible to have a lot of these companies off the OTCBB.

In a 2001 study published in the Journal of Alternative Investments, a period of four years over the Counter Bulletin Board trading was studied by a risk to profitability. The interesting finding that emerged was that OTCBB stocks to reflect what the general market was doing at that time. There were some years of extreme bullish sentiment generally can be described as a robust performance of the S & P, and the overall OTCBB market lost a lot of money. On the other side of that, the years of extreme bearishness in the S & P, together with the major exchanges, showed positive results for many OTCBB companies.

So if you are a safe bet, type of investor or a fly-by-the-seat-of-your-pants type, there is still a place for you, along with the major stock exchanges.