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Discussion in 'General Investing Discussion' started by Heyman_526, 7th Feb, 2020.

  1. Heyman_526

    Heyman_526 Member

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    Good afternoon ladies and gentlemen I was just wondering if a stock loses all of its projected value am I able to keep that stock and hope it will rise? Or does it become void? Cheers
     
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  2. Hodor

    Hodor Well-Known Member

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    hodor
    Not sure what you mean by "projected value".

    A stock is worth what a buyer will pay someone willing to sell. While a company is operating there is always a chance the price will go up or down.

    If a company closes/goes bust its assets will be sold off and anything left after costs etc. will be returned to share holders.
     
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  3. twisted strategies

    twisted strategies Well-Known Member

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    Heyman_526 ,

    i am similarly confused by your question ( as Hodor is )

    do you mean tangible assets ( assets it can sell like unencumbered property assets , IP assets etc ) , so basically becoming an empty shell ( ie trade name maybe a little cash or a drawdown facility that is still active )

    there is ( with some share registries ) an option to DONATE those shares of little current worth and claim an appropriate tax deduction ( and check with your tax accountant you MIGHT also be able to claim your crystallized losses )

    sorry i can't be more helpful yet
     
  4. Heyman_526

    Heyman_526 Member

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    What I meant to say was if I was to sell and my stock goes from $2 per stock to nothing can I keep that stock and hope for a rise or is it worthless?
     
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  5. twisted strategies

    twisted strategies Well-Known Member

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    Heyman_526 ,

    there is a saying , that it isn'y over until the fat lady sings

    so first of all has the company got any assets ??

    do outstanding debts outweigh the guesstimates of the compny's assets ???

    is the company making a profit ( after all expenses ) or relying on cash reserves or the ability to lure in more investors .

    if your stock is near worthless , but not in the administrators hands , things to be alert for are 'small parcel ' ( or unmarketable parcel ) buy-backs and if they are opt-in ( you can choose to SeLL to the company , it ISN'T automatic , or opt-out ( you have to fill in the form to keep your shares )

    now keeping your shares , SOME companies do come back ( not many , but enough to make it worthwhile taking a close look and your company to measure the heartbeat )

    less common ( the ASX restricted the practice ) is a reverse takeover where a company that WANTS to be listed ( in a hurry ) buys out a distressed company , basically for it's ticker code and it's listed status ( any assets are usually sold later )

    to give an example ( of a share i once owned ) AAO was a gold explorer that found some gold but could not raise a lot of excitement ( or cash to mine that gold ) but another company came along are offered a plastic card business as part of a 'partnership deal ' ( in fact a takeover )

    now the shareholder were NOT bought out but became share holders in a credit card business now trading as EML and new investors liked the new business model ( EML might finally be making a profit now , but my shares went up about 400% over the 6 or 7 years so i took the money and ran ( i bought a GOLD company , remember , if i wanted a finabcial services company i would have bought into one i LIKED )

    before the ASX changed the regulations on reverse take-overs your chances of a stock doing similar weren't bad maybe 6% or 7% at peak .

    but the question is will your stock come good , that will depend on the underlying business

    just because it is a $2 or $10 ( or even $100 ) share doesn't stop it from failing completely ( or coming so close your shareholding is near worthless even when the company recovers , like early holders of SGH or BLY who have been massively diluted )

    questions to ask yourself

    is the company suffering because the whole sector is struggling ( like retail or uranium minhg currently ) is so MAYBE the times will change in your favor , just not this year

    is the company plagued by bad management decisions ( some directors should never had been lrt out of kindergarten )

    is the company buffeted by outside factors ( like LYC )

    but the short answer is hope YES ( i have several so bad they might even cheer you up , one is so bad that if i sold it would not cover the $10 brokerage ) but CAN they come back , if you think yes .. are you willing to put some more $$$ into it and WAIT ( just don't forget to take SOME profit ion the way if it turns into a winner )

    please take care the share market is a risky place , there are many traps ( but some rewards if you pick right )

    and timing your buying ( and selling ) over the long term can make a BIG difference

    cheers

    PS some of the ( share ) traders here will tell you

    DON'T fall in love with a company ( and that has some wisdom as well )
     
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  6. Heyman_526

    Heyman_526 Member

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    Thank you very much for that information i appreciate it what are your thoughts on investing in the Industrial Bank Of China ? From an investment standpoint now would be a good time to enter
     
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  7. twisted strategies

    twisted strategies Well-Known Member

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    i have not looked at any banks in China , but i have a holding in SVW which has ( or might have sold by now ) a stake in the Agricultural Bank of China ( or one of them if there are more than one ) as a result of their dealership for Caterpillar .

    and i hold VUK ( a bank in the UK )

    so am not completely averse to exposure to international banks ,

    but how do you assess the bank as an investment , it is basically a leap of faith in Australian banks ( unfortunately recently displayed by the RC and other recent sagas )

    now a China specific question , do you anticipate the Chinese government to support ( inject cash ) into a failing bank ( in Australia the educated money thinks the Australian Government would support the 'big 4 ' but are not so sure on the smaller local banks

    and i firmly believe the there will be a major global downturn in the near future ( say , within 2 years ) so will there be a better time in the coming years ??

    another question i would have , is the investment in the bank cost effective ( what are the fees and charges associated with your holding an international share )

    i , in the past ( about 2014 ) had the option of switching to an international listing ( it was an ASX listed share at the time ) but could not find a cost effective way of holding the share , so chose to sell the position , i would wonder if that is still the same now

    ALSO research if you will hold your share directly or have to rely in a trust system ( where the broker holds the share on your behalf .

    please research your potential investment carefully , another thing to check is your tax obligations ( to China ) , i avoid US shares to avoid the extra paper-work