Stock Story Not too many posts lately, so here
Post# of 11039
Posted On: 10/19/2015 12:23:28 AM
Stock Story
Not too many posts lately, so here goes a story.
One upon a time there was a stock of a big telecom company in a country far away. Well, not that far away, it was in Mexico.
There was also an investor with big dreams and shallow pockets. Shrek? No, that was me.
The company was not doing very well financially and price had gone down.
The investor observed.
Some time later, buyout rumors started to surface.
The investor saw that the price had been stable for a while and decided to invest, not some of his money, not most of his money. He decided to invest ALL of his money.
Price little up, price little down, business as usual for a couple of months.
Suddenly, some news! Company was about to . . . about to go bankrupt!
Price tanking, then a swing up, then down again, a big roller-coaster.
Investor decided to hang tight. A couple of weeks went by.
Suddenly, more news! Good news? No.Trading halted. Details? No, no details anywhere. A couple of weeks went by.
More news! Trading was going to resume but only in the "secondary market". The secondary market is a market were to buy or to sell, investors have to call their broker and make an offer (grey market?). An average price was published once a day.
Investor called his broker and asked if somebody was buying. Good news, there were buyers. Bad news, the best offer was 25% of the investor's purchase price.
Investor decided to hang tight. Not because he saw a good future, but because he didn't know what else to do.
Time went by, for the four longest months ever. Offers were at 25% some days, some days lower, some days no offer at all.
Finally, news again! The stock was going to resume trading . . . and it did. Price started at the same level it was four months ago, then it tanked, then up again. Investor took the opportunity and sold everything. Price tanked again. All in the same day.
Investor finally got his money back and was very happy. Really, really happy, after all the odyssey he only lost a marginal amount of less than 2%.
Investor didn't want to know anything about the company again and didn't even track it again.
A couple months later investor got some news. The company was sold. Price, four times the share price he sold.
And that's the story. I'm not saying the same is going to happen here. I don't know. The message is that when there's a buyout or a merger, there are many tricks, deception, low blows, and more.
Not too many posts lately, so here goes a story.
One upon a time there was a stock of a big telecom company in a country far away. Well, not that far away, it was in Mexico.
There was also an investor with big dreams and shallow pockets. Shrek? No, that was me.
The company was not doing very well financially and price had gone down.
The investor observed.
Some time later, buyout rumors started to surface.
The investor saw that the price had been stable for a while and decided to invest, not some of his money, not most of his money. He decided to invest ALL of his money.
Price little up, price little down, business as usual for a couple of months.
Suddenly, some news! Company was about to . . . about to go bankrupt!
Price tanking, then a swing up, then down again, a big roller-coaster.
Investor decided to hang tight. A couple of weeks went by.
Suddenly, more news! Good news? No.Trading halted. Details? No, no details anywhere. A couple of weeks went by.
More news! Trading was going to resume but only in the "secondary market". The secondary market is a market were to buy or to sell, investors have to call their broker and make an offer (grey market?). An average price was published once a day.
Investor called his broker and asked if somebody was buying. Good news, there were buyers. Bad news, the best offer was 25% of the investor's purchase price.
Investor decided to hang tight. Not because he saw a good future, but because he didn't know what else to do.
Time went by, for the four longest months ever. Offers were at 25% some days, some days lower, some days no offer at all.
Finally, news again! The stock was going to resume trading . . . and it did. Price started at the same level it was four months ago, then it tanked, then up again. Investor took the opportunity and sold everything. Price tanked again. All in the same day.
Investor finally got his money back and was very happy. Really, really happy, after all the odyssey he only lost a marginal amount of less than 2%.
Investor didn't want to know anything about the company again and didn't even track it again.
A couple months later investor got some news. The company was sold. Price, four times the share price he sold.
And that's the story. I'm not saying the same is going to happen here. I don't know. The message is that when there's a buyout or a merger, there are many tricks, deception, low blows, and more.
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IMHO
Always, always do you own DD. Only invest funds you can afford to lose and trust nobody but yourself.
Always, always do you own DD. Only invest funds you can afford to lose and trust nobody but yourself.