HELP...Trying to understand stock pricing | FerrariChat

HELP...Trying to understand stock pricing

Discussion in 'Other Off Topic Forum' started by need4speed, Mar 11, 2004.

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  1. need4speed

    need4speed Formula 3

    Nov 3, 2003
    1,616
    Pacific Palisades
    #1 need4speed, Mar 11, 2004
    Before anyone says it, I already know I was stupid. And I now know that "Q" means "bankrupt".

    I bought a stock of a company in bankruptcy, ADELQ. I knew it was a big company so I thought if it gets out of bankruptcy, the price will rise again.
    So I waited for some signs of life. It bounced around in the .30s for a long time before Xmas. It finally broke .40 and I bought in. Now, there was no news or anything. I rode this to $1.90...I know, I should have gotten my money out and rode on free shares (I'm learning). I thought it was good for a bit more. Unfortunately, it crashed back down fast. I recently panicked and sold a chunk of shares at .40.

    But now the stock is going again. .60 today. And there's really been no positive news to justify the price increase both times. So what or who is controlling the price?

    I've heard of market managers and the short sells. Is this just what it is? Is someone just manipulating the price to make money for themselves and the rest of us are just along for the ride?

    My breakeven price is .85 now. I'm optimistically hoping that I can recoup my losses.

    Thanks for any words of wisdom
     
  2. tw1nturb0

    tw1nturb0 Karting

    Feb 2, 2004
    152
    #2 tw1nturb0, Mar 11, 2004
    In all reality, the money to be made in the common stock of a bankrupt corporation is post announcement and delisting. 99% of these companies are not 'investment worthy' due to the fact that the common stockholders are last to be protected in Chapter 11 mess. It works like this: when a company announces bankruptcy and delists to the Q status, 99.9% of the time the larger institutions that held the pre-chapter 11 stock now have to dump their entire position (if they hadn't ahead of time) since the stock price trades at a level too low...(usually below $10 or $5 depending). Institutions usually are prevented from holding names this cheap due to customer protection in the charter, so they treat the situation like hot potatoe...

    the common stock opportunity in these names lies in the first few trading sessions, or weeks, of trading Q status... the institutions sell the stock down at the mkt(remember... they're ancy to get rid of the crap in their protfolio)... and here is where you buy it. If ADELQ traded up to 1.09, that's great but it might not see those levels for a long time, if ever again. never look for the huge killing in these names. alot of the time you'll double or triple your money, just get out. Enjoy the opportunity.

    I did the same with SOLUQ... bought it at .25c within the first few days of selling pressure... I'd like to see 1.00 but i'll take .55c anyday.


    read Greenblatt's How to be a stock market genius.

    i know it sounds CHEESY, but his simplicity is brilliant. He's also the lead guy at Gotham Partners... SIZEOLA success.

    Enjoy it


    Rob
     
  3. beast

    beast F1 World Champ

    May 31, 2003
    11,479
    Lewisville, TX
    Full Name:
    Rob Guess
    #3 beast, Mar 11, 2004
    bankrupcy stock can move in strange ways at times. It will shoot up on no news and then tumble right back down in a couple of days.

    Just take a look at the 1 year chart on Enron ENRNQ they average over a million shares daily

    I was looking at united Airlines UALAQ and had feeling something was going to happen. I was correct it shot up to almost $3.50 from $1.75 with no warning 2 days later it took a dump and is now at $1.45. I am still kicking myself in the butt on that one for not jumping in before the surge.

    Rob
     
  4. tw1nturb0

    tw1nturb0 Karting

    Feb 2, 2004
    152
    #4 tw1nturb0, Mar 12, 2004
    and unfortunately, HLSH happens once in a lifetime :D
     

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