Famous Investors Who Got Their Start with Penny Stocks

1 June 2025

Ever heard the phrase, "A dollar and a dream"? Well, some of the most famous investors started not with a dollar, but with penny stocks—those risky, dirt-cheap stocks that can either turn you into a millionaire or leave you questioning all your life choices.

Let’s take a trip down memory lane and check out some big-name investors who rolled up their sleeves, embraced the wild side of Wall Street, and made it big starting with penny stocks.

What Exactly Are Penny Stocks?

Before we dive into the success stories, let’s get one thing straight—what the heck are penny stocks?

Penny stocks are shares of small companies that typically trade for less than $5 per share. They’re often found on over-the-counter (OTC) markets rather than major exchanges like the NYSE or NASDAQ. They’re cheap, volatile, and can either skyrocket or crash faster than your Wi-Fi during a Zoom call.

People love them because they give you the chance to buy a truckload of shares without breaking the bank. But they’re also risky—kind of like betting on a three-legged horse to win the Kentucky Derby.

Famous Investors Who Started with Penny Stocks

Now that we know what penny stocks are, let’s get to the good stuff—investors who kicked off their careers dabbling in these unpredictable little stocks before making it big.

1. Timothy Sykes – The Penny Stock Millionaire

If there were a king of penny stocks, it would probably be Timothy Sykes. This guy turned his $12,415 Bar Mitzvah gift money into over $1.65 million—all by trading penny stocks while in college.

Sykes mastered the art of spotting pump-and-dump schemes and shorting penny stocks (betting that they’d crash). He didn’t just make money—he became a millionaire before even graduating.

His love for penny stocks didn’t stop there. He went on to teach others how to trade them through his courses, proving that yes, even the riskiest investments have a method to the madness.

2. Peter Lynch – The “Common Sense” Investor

Peter Lynch, the legendary fund manager behind the Magellan Fund, is known for his down-to-earth investment strategies. But before he became a Wall Street legend, he had an eye for undervalued stocks—including some that started off as penny stocks.

Lynch believed that small, under-the-radar companies had the potential to explode in value. He didn’t just go after established blue-chip stocks—he hunted for hidden gems, often found in the penny stock world.

His philosophy? Invest in what you know. If you see a company growing in popularity and they’re still flying under Wall Street’s radar, that could be your golden ticket.

3. Warren Buffett – (Yes, Even the Oracle of Omaha!)

Wait, Warren Buffett? The guy who preaches safe, long-term investing? Yep!

When Buffett was a young investor, he occasionally dabbled in tiny, undervalued companies—some of which were basically penny stocks before they grew into giants.

One of his early investments was in a small company called GEICO. At the time, it wasn’t the insurance giant we know today. But Buffett saw its potential and went all in.

The lesson here? Even the most conservative investors understand that sometimes, small, cheap investments can turn into gold.

4. Jordan Belfort – The (In)Famous "Wolf of Wall Street"

Alright, so this one’s a bit controversial, but we can’t ignore it. If you’ve seen The Wolf of Wall Street, you know that Jordan Belfort made a fortune manipulating penny stocks (albeit illegally).

Belfort started as a young, hungry stockbroker, selling penny stocks to unsuspecting investors before founding his infamous firm, Stratton Oakmont. While his tactics were definitely shady, his ability to turn penny stocks into massive profits is undeniable.

His story is less of a “follow in his footsteps” and more of a “cautionary tale.” But hey, Hollywood took notice, so at least his story made for an entertaining movie!

5. Paul Tudor Jones – The Risk-Taking Hedge Fund Genius

Paul Tudor Jones is one of the best hedge fund managers in history. Known for his aggressive investment strategies, he started his career taking bold risks—including trading small, speculative stocks that some might call penny stocks.

Jones made his fortune by predicting (and profiting from) the 1987 stock market crash. His ability to analyze market trends and take calculated risks started early in his career, dealing with lower-priced, high-risk stocks.

His story teaches us that sometimes, it's not just about what you invest in, but how you handle the ups and downs of the market.

Should You Invest in Penny Stocks?

After reading about these investors, you might be thinking, Should I throw some money at penny stocks and hope for the best?

Well, not so fast. Penny stocks can create fortunes, but they can also drain your bank account faster than impulse shopping on Amazon.

Here are some things to consider:

✔ High Risk, High Reward – Penny stocks can deliver insane gains, but they can also crash HARD. It's like playing the stock market on expert mode.

✔ Scams Are Everywhere – The world of penny stocks is full of pump-and-dump schemes. Some shady traders hype up a stock, push the price up, then sell, leaving unsuspecting investors with losses.

✔ Harder to Research – Unlike big companies with years of financial data, penny stocks often belong to unknown, unproven businesses. Finding solid info on them is like trying to read tiny print without your glasses.

✔ Liquidity Issues – Sometimes, it’s hard to sell penny stocks because there aren’t enough buyers. That means you could get stuck holding onto shares no one wants.

So, should you invest in penny stocks? It depends. If you’re willing to do your homework, take calculated risks, and accept the possibility of losing money, they can be an exciting (but dangerous) part of your portfolio.

Final Thoughts

Penny stocks are like the wild west of investing—full of potential gold mines and plenty of fool’s gold. Some of today’s most famous investors either started with them, learned from them, or saw their potential before making their way to bigger and better opportunities.

If you decide to try your luck with penny stocks, just remember: be smart, do your research, and don’t bet the rent money. Because while some investors struck gold, plenty more ended up with a portfolio full of worthless paper.

At the end of the day, whether you start with penny stocks or blue-chip stocks, patience, research, and strategy always win the game. Even Warren Buffett would agree with that.