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  1. #1
    59'er Mariner Fan's Avatar
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    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?

  2. #2
    Cigar Smokin' Cyclist Travelin' Jack's Avatar
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    That depends on a lot of things. What are they offering to buy it for per share, and what's the price at now?
    Momentum is my only friend.

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    riding once again jschen's Avatar
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    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.
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  4. #4
    '05 NUEser EJ123's Avatar
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    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; $$$

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    '05 NUEser EJ123's Avatar
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    Yeah I would definatly sell.=D

  6. #6
    riding once again jschen's Avatar
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    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.)
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    '05 NUEser EJ123's Avatar
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    Quote Originally Posted by jschen
    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.

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    '05 NUEser EJ123's Avatar
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    Maybe just hold.

  9. #9
    59'er Mariner Fan's Avatar
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    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.

  10. #10
    '05 NUEser EJ123's Avatar
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    Like berkshire, heh.

  11. #11
    Senior Member DannoXYZ's Avatar
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    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.

  12. #12
    '05 NUEser EJ123's Avatar
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    Quote Originally Posted by DannoXYZ
    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.

  13. #13
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    Quote Originally Posted by EJ123
    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.

  14. #14
    59'er Mariner Fan's Avatar
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    Quote Originally Posted by DannoXYZ
    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.

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    '05 NUEser EJ123's Avatar
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    Quote Originally Posted by Hal Hardy
    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.
    How much $$$ was there in it?

  16. #16
    Senior Member
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    Quote Originally Posted by EJ123
    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.

  17. #17
    '05 NUEser EJ123's Avatar
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    What do you mean too risky?

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    Senior Member Mr. Gear Jammer's Avatar
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    Quote Originally Posted by EJ123

    Yeah I would definatly sell.=D
    Do they pay dividends, if so what are they?.
    Tropical pole vaulting is the shiznit.

  19. #19
    Senior Member
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    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/austr...lcoa.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.
    Last edited by Hal Hardy; 02-18-07 at 09:56 PM.

  20. #20
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    Quote Originally Posted by EJ123
    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.


    Quote Originally Posted by Mr Gear Jammer
    Do they pay dividends, if so what are they?.
    68 cents.
    Last edited by Hal Hardy; 02-20-07 at 07:29 AM.

  21. #21
    this one's optimistic... feethanddooth's Avatar
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    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.
    2002 cannondale r400, 2006 kona smoke, 2005 scott speedster s30

  22. #22
    On a mission from God svt4cam's Avatar
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    Quote Originally Posted by Mariner Fan
    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.

  23. #23
    Senior Member DannoXYZ's Avatar
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    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.

    Quote Originally Posted by Mariner Fan
    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...

  24. #24
    '05 NUEser EJ123's Avatar
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    Quote Originally Posted by DannoXYZ
    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?

  25. #25
    riding once again jschen's Avatar
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    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.
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