High mileage, lookout my boy, high mileage.

Price also gets corrected because people are looking at what the company and the stock will be worth in *different future points in time*. There are always investors who are looking to get results in a day, a month, a year, 2 years, 10 years, 30 years.

When Martha Stewart was in her worst trouble, the price went to like 20, but because her short-term prospects were horrible, her long-term prospects were not; and when she got out and it looked like her reknown would be greater than ever, the stock went back up to 40. If you were playing the long term, and really amazingly prescient, you might have figured that out when things looked to be at their worst.

In fact I've heard some people have systems where they buy stock that appears to be at its very worst point. Figuring out which ones are Martha Stewarts (where you double your money in 6 months), and which ones are Enrons (where you lose it all), is beyond me, but there are people who do it.

I bought Teligent at $35.00±/share once. It rose to $50. Then Bill Gates pumped $500M into the company. It rose to $100. I had to buy new shirts to accomodate my new chest size :).

Then, it fell. and fell. and fell. and fell. Then, it started falling. -snip- on Dec 31st of that year, I sold it all. For six cents per share. I sold it on the last day of the year so I would at least be able to write off the loss on my taxes. But, someone actually bought it at $.06/share. Who knows, maybe somebody found a hidden stash of paper clips behind a file cabinet which pushed it up to $.07/share. That's a 16% profit!

I mention this for two reasons. To illustrate that there is usually a buyer at any price. Hey, if someone bought ALL the shares at six cents, they would own ALL the assets of the company (following up on UT's observation). Well, maybe all Teligent's equipment, cars, computers, desks, chairs, a box of unopened golden handcuffs, etc. are worth more than ($.06)*(total number of shares).

The second reason I mention it is because I grow weary of hearing one after the other story (not here but IRL) of how Bob bought X and it tripled in 3 days, and Frank bought Y and it shot through the roof. No Body talks about how they bought a stock that later went on to rival a black hole from Stephen Hawking's worst nightmare for suckitude.

When my former employer tanked, it was estimated by the court trustee that we had about 25 mil in assets and 100 mil in debt (including the two paychecks that every American employee didn't get and the pension fund money that they literally stole out of the accounts of the UK employees... grumble grumble.) The stock had been trading at around 75 cents prior to the bankruptcy announcement. Afterwards, it was delisted, but somehow still managed to continue trading at a half-cent to 1-cent. This caused a lot of problems for employees who had been part of the Employee Stock Purchase Plan, because they couldn't write it off as "worthless" for tax purposes because it clearly still had a miniscule worth, yet they couldn't get any of their brokers to bother with the transaction of actually selling those shares.

I think in the end most of them just pretended that it WAS worth zero and wrote it off as such. Could that be counted against those employees in an IRS audit? And how is it that a bankrupt company, now essentially "owned" by the court as they will be determining to whom all the existing assets will be given, can still have "shares" at all??

A share is a claim on the assets of the company. Debt is also a claim on the company. Debt always comes before equity so all assets will be liquidated and distributed to the debt holders and since there isn't enough to satisfy their claims, all ownership claims (e.g., outstanding stock) will be terminated/voided.

I'm sure there is a real rule about how to treat an untradeable stock but, in time, it really will be worthless. It may be possible to "surrender" one's claim/"abandon" the claim to make it official - so you wouldn't have to wait ten years for a court to stamp it worthless. Its worth looking into.

that is textbook "value" philosophy investing, versus "growth" investing. the two philosophies take turns leading the way with the best returns. value has been doing better than growth for a number of years.

Clodfobble - i am not an accountant so i can't tell you about audits.

i can tell you that if there is "no market" a "no market" letter can be used as proof that the stock is a loss.

In order to increase liquidity, the NYSE also has what are called specialist firms. Their job is to buy equities when no one else is available. During the 1987 stock market crash, these specialist firms bought massive amounts of stocks when no one was buying. The Federal Government even setup emergency loans to these specialists so they could buy those stocks. Loans that helps maintain the integrity of the market. As a result, those specialists later sold stocks mostly at a profit.

Specialist firms were mostly family owned organizations. But since then, most (if not all) specialist firms have been bought up by large equity firms. Listen closely to the news. Those specialist firms are now under investigation for trading activities. Back then, the purpose of a specialist firm was to serve the market. Today, profits have become more important meaning that some specialist firms are under SEC or NY state investigation. Back then, the good name of that family was at stake. Today ....

Stock markets are carefully to keep stocks liquid. A stock market will do everything possible to assure an equity can be sold. Stocks that trade too thinly can even be delisted from that exchange. All this so that a market always exists for your equity. The liquidity of your stock is very important to those who own and operate stock markets.

Is this the same company that was originally established in a joint venture of IBM and Apple Computer?

No, it was started by Alex Mandl from AT&T and some SVP from MCI as a telecom. Neither IBM nor Apple were involved in it.