WaPo: Night of the Living Stocks
the classics never die
Oh too freaking hilarious not to share. Seriously.
To prove how astonishingly easy it is to make a dimwitted investing move, I logged into my online brokerage account the other day and bought stock. I have made dumb buys before -- who hasn't? -- but this time I was practically betting on a horse that could no longer gallop.
It's not like I didn't know a lot about this company, a common investing sin. Actually, I do. I have been reading about this company for months. I studied its history in college. Like millions of other Americans, I once even owned one of its products.
I invested in General Motors. Well, not the new General Motors I keep hearing about in TV commercials -- rather, what's left of the bankrupt GM, now known as Motors Liquidation Company. Ticker: MTLQQ. Buying a share in Motors Liquidation took fewer steps than ordering a book from Amazon.com. I paid 75 cents.
A few clicks and my experiment made me the rather unproud owner of a zombie stock -- so known because its shares are almost certainly headed to zero due to bankruptcy proceedings or insolvency. Once bankruptcy is complete, zombie shares almost always vanish, meaning the right price on them is zero. Any bet on them at a higher price would be better spent searching for ghosts.
"What people really need to understand with these stocks is that they are speculating, they are not investing," said John Gannon, senior vice president for investor education at the Financial Industry Regulatory Authority, also known as FINRA. "They are simply taking a bet." Asked which was a bigger bet -- a zombie stock or the lottery -- Gannon said, "With the lottery you know the odds."
My question is this: when are we going to decapitate Citigroup? [legal disclaimer for idiots who take things too literally: Jr Deputy Accountant never ever encourages violence of any sort and in fact is all about the love when it comes to just about everyone, except maybe Vikram Pandit, who deserves to be kicked. But not literally.]