Are Penny Stocks a Good Way to Start Investing? Chris Sain Breaks It Down
Short answer: Not as your first move. On this episode, investor and educator Chris Sain says penny stocks hand you the same rush as a dice game or a slot machine — you might win once and lose five times, and then you quit the market entirely, convinced it was never for you. His advice for new investors is to start with quality companies you can hold for years and treat the whole thing as a marathon, not a hit.
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Big O: We were going to do this broadcast live, but I thought it’d be best to get a freer conversation. What motivated you to start the zero to $100K challenge? — Chris Sain: I really wanted to turn people on to the stock market. For the longest time our people have been playing the wrong game. CNBC don’t talk our language; I know that I do. Black people are not gonna believe you if you don’t show them, so I started with zero dollars, because many can relate to having zero dollars. I wanted to show we can turn zero into our first hundred, and watch a hundred grow to two-fifty. We shouldn’t be in the Jordan line — we should be owning Nike. — Big O: What’s the biggest issue with teaching people to work the stock market? — Chris Sain: People think it’s get-rich. We shoot dice in the hood, so they bring that mentality to the stock market. The penny stock gives you that quick rush, like you’re at the slot machine or playing craps. But that’s the recipe for a disaster: you might win one time, but you’re gonna lose five, and then you’re not even gonna come back to the market. You might not have to buy Apple at a hundred dollars, but you can buy something up-and-coming that in five years will be a household name, without the volatility of a penny stock. — Big L: With median wealth in Black households where it is, folks say they can’t afford stocks. How do you combat that? — Chris Sain: We have to understand we can’t afford not to invest. Reduce spending, live within your means, cut out cable. That money becomes the money you’re safely putting in the market. My car note used to be four hundred forty-nine dollars. When it was paid off, I never stopped paying the $449 — I just kept paying it to myself. — Big O: You say you don’t put money in the bank. — Chris Sain: Be mindful you still need a bank account for your bills. Don’t use money you need to pay a bill. Let Nike be your emergency fund. — Krush: How do you instill a long-term mentality when the gratification from penny stocks is right there? — Chris Sain: It’s about understanding that it’s a marathon. Nipsey Hussle couldn’t have been better for the culture; the stock market is the same way. I’m naturally a calm dude — I don’t walk fast, I don’t talk fast — and those same characteristics became my investment style. I just want to make money over time. — Big O: There’s a Black tax, the expectation of giving back. How have you balanced that? — Chris Sain: My nonprofit is built on it. I send kids to college every year on scholarship, we give turkeys every Thanksgiving, backpacks, laptops and iPads to close the digital divide. That’s just naturally who we are. [Transcript lightly cleaned from the YouTube auto-captions for readability. Hosts: Big O, Big El and Krush.]
Who Chris Sain is, and why people listen
Sain came up in Michigan in a two-parent household, played Division I football at Michigan State, and had a master’s degree by 24. He also watched one of his brothers go away for 25 years — and says that contrast is a big part of why he does what he does.
In January 2020 he started a “$0 to $100K challenge” and documented every step of it on YouTube. He crossed six figures well before the year ended. The reason he started from zero was deliberate: “many can relate to having zero dollars.” He didn’t want to open with ten or fifty thousand and lose the room. He wanted people to see $100 turn into $250, because that’s a win anybody can picture.
The other deliberate choice was transparency. “Black people not gonna believe you if you don’t show them,” he told the hosts. So he showed them — trades, losses, receipts.
Why penny stocks feel so good, and cost so much
Here is the core of his answer. The biggest problem he sees with new investors isn’t ignorance. It’s that they bring a gambling posture to an investing game.
“We shoot dice in the hood,” he said. “They’ll bring that mentality to the stock market.” A penny stock gives you the slot-machine feeling — the fast spike, the screenshot, the story. But the math underneath is brutal: “You might win one time, but you’re gonna lose five, and then you’re not even gonna come back to the market.”
The regulators back the caution up. The SEC classes penny and microcap stocks among the riskiest things a retail investor can buy: most don’t trade on the NYSE or Nasdaq, many file little or no financial information, they’re thinly traded, and that combination makes them unusually easy to manipulate.
Sain’s alternative isn’t “buy Apple at any price.” It’s to find real, boring, growing companies before they’re household names — the ones with actual revenue and no penny-stock volatility. Big El pushed back on him live about a few speculative names in his own portfolio, and Sain didn’t fully back down either. That exchange is worth the watch on its own.
“I can’t afford to invest” is the wrong sentence
The hosts brought him the objection everybody hears: with median Black household wealth where it is, people say they can’t afford to invest — meaning they can’t afford to lose.
Sain flipped it: “We can’t afford not to invest.” His practical version is unglamorous. Cut an expense and redirect it. Drop the cable package, keep the wifi. Reduce the subscriptions. Then the money you were paying a carrier every month becomes the money going into an asset — and because you cut something to fund it, a down month doesn’t panic you.
He told one story that landed hardest. His car note was $449. When the lease was paid off, he never stopped paying $449 — he just started paying it to himself. He’d also paid down debt first so there’d be more room to invest later, but he never stopped investing something along the way.
“Don’t put your money in the bank” — with a real caveat
Sain is known for saying he doesn’t park money in a bank; he parks it in companies. On the episode he explained what he actually means. He keeps a bank account, because his bills are on autopay and they have to clear. Everything past that goes into a short list of companies he holds.
“Let Nike be your emergency fund,” he said.
He was clear about the line, and we’ll be clearer: don’t invest money you need for a bill, and understand that an emergency fund in stocks can be worth less on the day you need it than the day you put it in. That is the tradeoff you’re accepting, not a loophole around it. This is one investor’s approach, not personalized financial advice — your situation, timeline and risk tolerance are yours.
The mindset is the whole thing
Ask him how you get someone off instant gratification and onto a ten- or fifteen-year horizon, and he goes straight to Nipsey: it’s a marathon. His own investing style, he says, mirrors how he moves in real life — slow, calm, in no rush.
Then he put the paradigm shift in one line: we shouldn’t be standing in the Jordan line, we should be owning Nike.
Five years on, the gap he was attacking is still open. In the Federal Reserve’s most recent Survey of Consumer Finances, 39% of Black families owned stock directly or indirectly versus 66% of white families — and the median value of those holdings was $16,500 against $67,800. That’s not a taste difference. It’s the compounding engine most of America runs on, and we’re underweighted in it.
We’ve mapped the machinery around that gap before: how the U.S. tax system quietly disadvantages Black Americans, and the affordability crisis hitting Black families. Sain’s episode is the other half — what you can move on Monday. It pairs well with Jason Green on building Black community that lasts, because Sain does the same thing with his money: scholarships, Thanksgiving turkeys, laptops and iPads to close the digital divide in his city.
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Nothing here is financial advice. In The Black Podcast and Bold Ventures Media LLC are not licensed financial advisors.
