Saturday, June 13, 2009

Why you need to do research before buying stock

Dang. Sometimes you hear about stock prices way too late. Six Flags filed for bankruptcy today; a smart move to save interest on loans after unsuccessfully trying to reduce its debt interest rates.

In the story, I read where its stock is trading at 26 cents. I have faith in Six Flags. The bankruptcy appeared to be a smart business move. I’m all ready to execute my trade, but before pulling out that wallet, you need to do your research – even if you’re President Barack Obama investing $80 in hamburgers. Will they taste good; will that newsman like them? Will you get great PR from it?

So I went to my favorite research site to discover the stock has been half of what it is today in late April. Not a bargain at 26 cents.

Then, I have a way of looking for patterns in stock. Six Flags is at a point today where it was in late October as well as December. Each time it reached where it is today, it has taken a dive.

I’d love to buy Six Flags. It’d be a great company to invest in, but its stock is too volatile at the moment. If you want to take a plunge in this company, I would suggest a buy option at 18 cents. You may lose some, but in five years you may be thanking me for this advice. As I said, I believe in six flags. Just don’t ask all my friends who were stuck with MCI stock when it did the same thing as Six Flags in the stock market. I sold my MCI shares just before Worldcomm purchased it, making MCI stock worthless. I believed in MCI, but I saw what was coming.

If Six Flags is up for sale, this could make its stock worthless. Someone knows, and if they tell me, I’d be like Martha Stewart and the SEC would put me in jail for insider trading. But… looking at news headlines for the company, I would wager it is for sale – probably to foreign investors – can we say Dubai? Remember, like the economy turn around, Miley Cyrus 2009 tour, you heard it here first.

Wish I had watched this stock when it fell to 13 cents. I could have doubled my money today.

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