Stock to Zero?

[Bekka]

#16269

If , for example, a stock in my portfolio goes all the way to zero, since I still own the stock, can it rebound and turn around and have value again or what happens to it?

[Sean Hyman]

#16271

No. Shareholders would be wiped out. The company would go bankrupt. It could get a new symbol on the “pink sheets” and still exist/run. But your shares would be done, at that point.

In a bankruptcy, bondholders get paid first (if there’s anything left for them to get) and then preferred stock holders and then common-share stockholders. The latter is what most everyone owns.

[Bekka]

#16299

DO is at 1.70. So you are saying that if tomorrow it goes to zero, that it’s done and everybody loses their money?

[Sean Hyman]

#16302

Yep. It’s not likely to go to zero tomorrow, but yes. Just because a stock price goes low doesn’t mean its going under. CIG went to 82 cents per share and then proceeded to rally back over $4, etc. And is still in business today.

But I don’t expect any oil stock to go up until oil itself goes up.

[Bekka]

#16338

Thanks for making that clear.

[Sean Hyman]

#16339

You’re welcome.

[Eddie Kerby]

#16626

Yep, that happened to me with Peabody. It went to zero and I lost all of the investment and they are still in business. That is why you don’t want to be overweight in any 1 stock.

[Sean Hyman]

#16627

Correct. It’s why when their fundamentals turned, I didn’t suggest investing additional capital into it. Agreed.

[Christopher Walsh]

#16655

Same with OVV, dropped amazing amount. I have had ECA for 4 years and turned into OVV..Hoping they stay alive

[Sean Hyman]

#16656

Yeah, there’s absolutely no reason for any oil stock to turn up until oil itself actually does. That could take a bit with Saudi Arabia/Russia just beginning an oil war. Saudi doesn’t even start upping its production by 2 million more barrels per day until April 1st. Of course, upon the news of it…the market has already discounted part of that, by the recent downward move in oil.

[Christopher Walsh]

#16680

Makes it very attractive ..as I have cash for averaging down…and metals going up, and SPXS doing well…I just will follow your rules and try not to put too much in one basket..but tempting! Its here, potentially, what you have been preaching for the past couple years.. I’m ready!!

[Sean Hyman]

#16687

Just don’t average down on the weaker companies…only the stronger companies, fundamentally.

Awesome! As SPXS gets far away from its moving averages, you should consider exiting or at least significantly lightening up your position so that the recoils don’t eat you up.

[hved]

#16782

I am assuming that we should be averaging down on all your current picks?

[Sean Hyman]

#16784

Correct. Averaging down levels don’t change, no matter what the market does. In fact, because I’ve been anticipating this…it’s why I have such wide/low averagings on some picks. Its how a downtrend becomes our friend.

[hved]

#16787

Thanks Sean….I’ve been averaging down after at least a 15% drop. Which on some of our stocks have been almost every other day for the last week or so.

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