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Author: synchronicity Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 610  
Subject: Re: UAL - The search for a bull Date: 12/9/2002 2:25 PM
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o.k. guys, so, I am brand new here but loooong in the airline industry. I would NEVER buy airline stock but noted recently that if you purchased $10,000 worth of LUV in 1976 it would be worth 1.4 Mil today (Mone mag -dec- I believe) So since UAL is soooo affordable today, I was thinking of 600 shares? Yes??? No???

NO!

United just filed for Chapter 11 bankruptcy protection this morning. There's a reason it's "affordable".

General rule- don't buy shares of stock in a bankrupt company. Most if not all of the time, all the common shares will be cancelled before the company emerges from bankruptcy (this assumes that the company does emerge from bankruptcy, which is not guaranteed), and your shares of common would become worthless. At best, new common shares would be issued that would dilute your holdings considerably. It is highly unlikely that you would make any money owning shares of a bankrupt company, and it very likely that the shares would wind up worth zero.

Also, just because a stock used to trade for a far higher price, doesn't mean that it's a "good deal" because it's much cheaper now.

Good luck as you learn about investing. A few suggestions: equity investments should only be your "long term" funds (money you won't need for 3-5 years, at least) and if you are new to investing, look at putting money in a low cost stock index fund (my favorite is Vanguard Total Stock Market Index (ticker VTSMX), and then learning more about investing before buying any individual stocks.

-synchronicity
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