Foo - Any Stock traders in Foo?

I have a 401K from my former employer (Alcoa). Apparently, there are some investors that are trying to buy the company and the stock is going up. :)

As I recall, corporate buy outs artificially raise the price of the stock but once the sale is done the stock drops. Think I should sell my Alcoa stock?

That depends on a lot of things. What are they offering to buy it for per share, and what's the price at now?

I think you should have a diversified portfolio. If you have a lot of Alcoa stock, it would be a good idea to gradually trim back your holdings regardless of whether you think the company will do well. Remember, there's a whole bunch of really smart people out there whose job is to analyze companies. If you think you're able to consistently beat them at analyzing a large company, you either should be in investment banking yourself or are naive or foolish.

Jesh, on close of Tuesday last week it went from 33 to 35.5 on Wednesday morning.
I would sell.
If I had a couple g's to spare, I would buy a company that is worth maybe 20cents a share, and buy at least 30k shares, and when that company goes up just a tad...heh; $$$

http://i7.photobucket.com/albums/y251/viperfx10/uhoh.jpg
Yeah I would definatly sell.=D

Why? Because the price went up? The price is higher because the expectation is now higher. If one definitely should sell, then those on Wall Street holding huge amounts of the stock would be selling, and supply and demand would bring the price down. If one definitely should buy, then they'd be buying, bringing the price up. When they act, they act with huge amounts of money, causing quick changes in price. In principle, in an "efficient market", your expected returns are the same no matter what stock you hold (assuming the stock choices have comparable risk profiles) since others have already beaten you to any opportunities. (In reality, of course, no market is perfectly efficient.)

Why? Because the price went up? The price is higher because the expectation is now higher. If one definitely should sell, then those on Wall Street holding huge amounts of the stock would be selling, and supply and demand would bring the price down. If one definitely should buy, then they'd be buying, bringing the price up. When they act, they act with huge amounts of money, causing quick changes in price. In principle, in an "efficient market", your expected returns are the same no matter what stock you hold (assuming the stock choices have comparable risk profiles) since others have already beaten you to any opportunities. (In reality, of course, no market is perfectly efficient.)
Alright, let's just see what happens this upcomming week.:D

Maybe just hold.

I'm leaning towards selling. I remember companys going up for sale and the stock went sky high. Once the company sold the stock dived. Now Alcoa is a big company. It would take a big investor to buy it.

Like berkshire, heh.

Don't be greedy, sell some now and put away some profits. Then hold the rest to see what happens.

Most of the time, the stock will spike up and be pegged at the tender price. Your holdings is then converted into equal-value shares of the new company.

Don't be greedy, sell some now and put away some profits. Then hold the rest to see what happens.

Most of the time, the stock will spike up and be pegged at the tender price. Your holdings is then converted into equal-value shares of the new company.
we need a wikipedia page on your smartness.:D

If I had a couple g's to spare, I would buy a company that is worth maybe 20cents a share, and buy at least 30k shares, and when that company goes up just a tad...heh; $$$

A few days ago, I got to poking around looking at some penny stocks. I don't remember who it was, but a couple of months ago, one of them jumped over 22,000% in one day and stuck rather than falling back to a more reasonable level of equilibrium. Good luck finding the next one to do this. :D

Don't be greedy, sell some now and put away some profits. Then hold the rest to see what happens.

Most of the time, the stock will spike up and be pegged at the tender price. Your holdings is then converted into equal-value shares of the new company.

It's not being greedy Danno. You should sell your stock if you feel it will take a dive.

A few days ago, I got to poking around looking at some penny stocks. I don't remember who it was, but a couple of months ago, one of them jumped over 22,000% in one day and stuck rather than falling back to a more reasonable level of equilibrium. Good luck finding the next one to do this. :D
How much $$:)$ was there in it?

How much $$:)$ was there in it?

I was just looking at charts out of curiosity, I didn't investigate it. I would need a Divine revelation to buy into this part of the stock market. It's waaaaay too risky. It most likely landed a (government?) contract that put it in the profitable category. One thing's for sure, it ain't a penny stock anymore.

What do you mean too risky?

http://i7.photobucket.com/albums/y251/viperfx10/uhoh.jpg
Yeah I would definatly sell.=D

Do they pay dividends, if so what are they?.

The last I heard, BHP Billiton was the company interested in buying Alcoa, but it's only a rumor, and according to this article, there's no advantage for them to do it.
http://biz.yahoo.com/ap/070214/australia_alcoa.html?.v=2

Also keep in mind that unless you roll it over to another 401K, you'll be liable for at least federal income taxes when cashing it out.

What do you mean too risky?
1) Penny stocks are usually itty-bitty companies that may be here today and gone tomorrow. On the other hand, they can also be huge companies. Enron is now a penny stock. Ford was one in the '80s and looks to be heading back to there if they don't get their act together.

2) Some of them are rip offs. The management takes the company public, pockets the IPO proceeds, and either "forget" that they now answer to the shareholders and let the company grow weeds, or just go bankrupt and stick it to the shareholders if they can't recover their investments by liquidating the company's assets.

3) If they trade enough volume, and are handled by a Specialist (a weird, potentially corrupt system that is finally disappearing due to electronic trading), they are fairly easy to be manipulated, and taken advantage of by savvy day traders. The share price can move for no other reason than these people want it to.



Do they pay dividends, if so what are they?.
68 cents.

i recently began my 401k with starbucks. they also offer a stock program that gives me 15% off the lowest price during each quarter. i select the amount in % i want to deduct from my check and it puts it into an account and buys the stock each quarter.

they also grant you stocks just for the hours you work. but i wasnt hired in time so that wont start for me until next year.

I have a 401K from my former employer (Alcoa). Apparently, there are some investors that are trying to buy the company and the stock is going up. :)

As I recall, corporate buy outs artificially raise the price of the stock but once the sale is done the stock drops. Think I should sell my Alcoa stock?

One of two things will happen with Alcoa 1) A deal will be struck with the buyers paying a premium per share to the closing price of the company on a given day. If that occurs you will be offered an appropriate amount of stock in the purchasing company or if they are taking it private I'm not sure what happens. 2) Deal will not go through or be approved by the SEC and stock retraces it's gains. If you have someplace better to put the money than you might want to take advantage of the rise and sell. If you like Alcoa and think the buyers can continue to make it grow hang in there.

jschen's a smart guy, listen to his implicit message. The "value" of a stock at any given time is determined by expectations of all the other players in the market. The price you get when you sell that stock has only to do with what that next guy is willing to offer you for it and that's based upon his expectations, nothing else.


It's not being greedy Danno. You should sell your stock if you feel it will take a dive."Feelings" should not have any place in investing at all. You need to be ruthlessly objective with measurable concrete sell points. People get too focused on buying and finding the "perfect" stock, however there is no such thing. The value of a stock should only be determined based upon its behavior and yield for you when you actually own it. If it makes you money, it's a "good" stock. If loses you money, it's a "bad" stock. Or it might play dead and do neither. It's really when you SELL that determines whether you make or lose money or break even. With the exact same stock, bought at exactly the same day and price, that stock can make one person money, break-even for another, or lose an entire fortune for another depending upon when you sold.

In the case your thinking of, if you have precise sell points as determined by volume, moving-averages, MACD, stochastic, etc. then if they point towards selling, sell the entire lot and short an additional amount. Remember, a stock is either moving up, moving down, or staying flat. If you sell to lock in some profits, might as well stack up additional profits on the down side as well...

jschen's a smart guy, listen to his implicit message. The "value" of a stock at any given time is determined by expectations of all the other players in the market. The price you get when you sell that stock has only to do with what that next guy is willing to offer you for it and that's based upon his expectations, nothing else.

"Feelings" should not have any place in investing at all. You need to be ruthlessly objective with measurable concrete sell points. People get too focused on buying and finding the "perfect" stock, however there is no such thing. The value of a stock should only be determined based upon its behavior and yield for you when you actually own it. If it makes you money, it's a "good" stock. If loses you money, it's a "bad" stock. Or it might play dead and do neither. It's really when you SELL that determines whether you make or lose money or break even. With the exact same stock, bought at exactly the same day and price, that stock can make one person money, break-even for another, or lose an entire fortune for another depending upon when you sold.

In the case your thinking of, if you have precise sell points as determined by volume, moving-averages, MACD, stochastic, etc. then if they point towards selling, sell the entire lot and short an additional amount. Remember, a stock is either moving up, moving down, or staying flat. If you sell to lock in some profits, might as well stack up additional profits on the down side as well...


What is your intake on investing in those <1.00 stocks?

Do you think you can beat someone like Danno at analyzing little-known companies and predicting their stock movements? Now imagine a thousand such people, all of Danno's intelligence and all doing it full time, all ruthlessly trying to take advantage of each other and of whomever else might come along. How do you think you'll do? Not in one trade, but in a thousand such trades. How often will you be successful? How often will that ruthless bunch steal your lunch money? I don't know whether or not I'm smarter than those professionals. Maybe I am. But I know that I sure don't have the time or inclination to put in the due diligence to consistently succeed against the hordes of smart people out there doing this for a profession.

In my opinion, unless you're going to do this for a profession, better to track some well-chosen indices for the bulk of your portfolio and if you so desire let professional managers give you a fighting chance to come out ahead with a portion of your portfolio. I have way better things to do with my time than to constantly research companies. I'm paying 0.09% annually for my domestic indexed investments, 0.32% for my international indexed investments, 0.35% for my actively managed domestic investments, and 0.72% for my actively managed international investments. I'd probably rack up way higher expenses going at it alone, and I really doubt I could beat the people handling my money anyway. I let them sweat it, and just watch from arm's length to make sure they're doing their job.

Investing isn't about having an exciting hobby. It's about dollars and cents.

Investing isn't about having an exciting hobby. It's about dollars and cents.

You're a very wise cabbage.

What is your intake on investing in those <1.00 stocks?It can be done.... However, while the percentage-gain amount of penny-stocks might look attractive, you have to incorporate this with two other measurements, namely wins-to-losses ratio and the risk-to-rewards ratio overall. It's all based upon probability and statistics. For example with high-cap/high-priced stocks that are attractive to mutual-funds (the real major movers in the market), you might see stats of:
average returns of 20-50% or -15-40%
win-to-losses of 3:5
overall risk-to-rewards ratio of $-80:+100
for a +20% gain annually. Playing with the penny-stocks might give you stats of:
average returns of 50-250% or -60-300%
win-to-losses of 1:15
overall risk-to-rewards ratio of $-75:100 to -250:100
You can't look at it as a single transaction that goes in your favor all the time. No one can beat the odds and the odds with penny-stocks are much much lower, at 1:15 wins vs. 3:5 in other stocks. The higher risk-to-rewards will end up giving you lower gains overall in the long run.

All depending upon strategy and tactics of course. With penny-stocks, you pretty much have to go on pure technical-analysis only. You'll need some very specialized software with user-programmable trading rules. Check out:

NinjaTrader (http://www.ninjatrader.com)
TradeStation (http://tradestation.com/default_2.shtm)
OmniTrader (http://www.omnitrader.com/)
MetaStock (http://www.metastock.com/)
WaveTrade Classic (http://www.wavetrader.com)

The particular strategy that may work would be known as "swing trading" or using cyclical waves, such as Elliot waves or MACD along with stochastics and RSI. Check out Bryce Gilmore's Price Action Manual. The idea is to be long the stock only during the brief periods that it's profitable and sit on cash the rest of the time.

This actually applies to the higher-priced stocks as well. Owning Apple from Jan-06 to Jan-07 (http://i42.photobucket.com/albums/e346/DannoXYZ/Investments/Apple070101.png) would've given you roughly 15% return. However, getting in and out purely based upon price-action, volume, MACD and stochastics would've given you a 50-60% return (even higher if you play the downside as well as the upside movements). So again, it's not so much on what stocks you buy, but how and when you sell that determines your profit level.