how much can you afford to loose with little or no pain $100, $300, $1000?
the boob tube said that worldcom stock was 8 cents. it said worldcom had $107 billion in assets, $30 billion in debt, 61,000 employees, 20,000,000 MCI customers, controlled a significant percentage of the internet. with 2 billion outstanding shares one might think they should be worth around $30 each. but,
the market is in a strange state with the dot.com crash, sept 11, enron-anderson, and worldcom misreporting 4 BILLION DOLLARS. very strange that! in my normal somewhat paranoid mode i might wonder if they did that deliberately so they could go into bankruptcy so they could get rid of some of that $30 BILLION in debt. i have a suspicious mind. but,
$100 would bring 500 shares at 0.20. the price has been bouncing around that level. if the price goes up to $10 in a year that’s $5000. the worst that could happen is loose $100. that would annoy me but i have blown or lost more than $100 numerous times in my life. no biggy. so i decided the potential upside is too good to pass up.
Stocks of companies in bankruptcy is a suckers bet, worse than drawing to an inside straight. The way bankruptcy works is that if there is a reoganization, there is a slim chance that the shareholders might retain some equity. But in any sell off of assets, or a liquidation, most likely in the WorldCom case due to the high debt load (highest ever for a bankruptcy), the shareholders equity is the last to get any value. You are better off as an unsecured creditor, and that would net you nothing too. Save your $100 and take your pals out to pizza.
taggert, that’s assuming the company will be liquidated and sold off piecemeal. I think there’s a fair chance that WorldCom will be deemed too large and critical to fail.
I’m speaking in a vague sense here, 'cause I really DON’T know the relevant laws. What I’m thinking about is a parallel to how some large FDIC insured banks were treated. Small banks are allowed to close their door, and the Feds simply pay off the depositors to their insured limits. But large banks are suffused with more capitol(al?, I can never remember which), pressured into changing the management team, and kept open.
This is, of course, an uninformed WAG. But if something of th like happens due to wider political considerations, dal_timgar would be right.
[hijack]
However, I have no faith in the stock market. I won’t put any money into it under any circumstances. My plan is never to retire, to work til I drop dead. If I am disabled, I will suck at the government’s teat until it comes to its senses and allows me to have an assisted suicide.
Even if you spend 20 bucks and worldcom gets above the dollar value you could make big returns. But I wouldnt invest more than 20 bucks. Its a very risky speculation, but potentially a very popular one.
I am surprised the biggest downside to investing in WorldCom has not yet been mentioned.
Lawsuits.
When a company has done such a big business in defrauding people, lawyers come out of the wookwork. It is extremely hard at this point to guess how much award for damages will be in upcoming shareholder lawsuits.
My WAG is that it is going to be greater than it’s assets plus projected earnings for years to come.
In which case, you would lose.
If the lawsuits magically go away (Congress has done some really stupid stuff in protecting criminal corporations), then on paper you could make money. But such logic is not Wall Street’s forte. A couple years ago, both Seagate and USR had subsidaries whose stock value was deemed to be greater than the value of the companies that held that very stock.
Not to mention that Worldcom is currently appealing the SEC decision to have its stock delisted. So it’s probably not going to be around much longer anyway.
I bought $500 worth of Value Jet stock at $2.00/sharewhen they nosedived (into the swamp and stock value.) When the NTSB OKed them, the stock went up to $6.00 and I sold. Yep, tripled my money in two weeks. Hillary can bite me.
