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Some find it hard to forgive, forget crash of highfliers

Q. For several years I have been following the stock price of a once-highflying company that now trades for about $3 per share. The company replaced its CEO last fall and since then has experienced three successful, profitable quarters for the first time in years.

Why would investors continue to ignore such an inexpensive stock? Management is apparently good, earnings are on a significant upswing, yet the company remains ignored. What else should an investor look for that would justify the investment community's obvious disregard for what appears to be an excellent speculation with minimal downside risk?

A. The answer is that other investors are not as convinced as you are that this company has turned things around. When a highflier crashes and burns, investors do not find it easy to forgive and forget, especially if they lost a lot of money. The ensuing skepticism makes it more difficult for them to buy into the company's story the next time around.

As you have discovered, stock prices do not move in lockstep with profits. Rather, they reflect a stock's popularity or lack thereof. One of Sir John Templeton's best-known pieces of investment advice is that stocks should be bought at times of maximum pessimism. If the stock really is an unappreciated gem, you have picked a good time to buy it.

Q. My wife and I are in our early 70s with very limited knowledge regarding the market. In addition to our IRAs, we have about $100,000 in an FDIC-insured bank account paying 4.53 percent. Would it be a mistake to transfer those funds to a government money fund such as Zurich Yieldwise?

A. Not if you understand how this and other money funds work and are willing to take a smidgen more risk. While money funds have an excellent safety record, they are not guaranteed.

If a fund offers an above-average yield, study the literature or ask questions to find out how it manages to achieve that. The fund you mention is being subsidized by its management company. It is fine to take advantage of the company's largesse, but it also is important to understand that the subsidy could be withdrawn, and if it is, the fund's yield will drop by about a half percentage point.

You also should be aware that this company charges fees for various services, such as a $2 check fee if your account balance falls below $100,000. There also is a $1,000 minimum check size. Obviously, this fund would not be a good substitute for a regular checking account.

Q. I own 100 shares of a stock that I would like to donate to charity. I would like to donate 25 shares to four different charities, but my broker charges $25 to issue each certificate. Is there any way to minimize the charge for issuing certificates?

A. Don't get certificates. Ask to have the shares transferred directly to each charity's brokerage account. If a charity does not have a brokerage account, ask if it will open one. The charity will need an account if it wants to sell the shares you donate, so it might as well open one now to facilitate the entire transaction.

Q. I am 77 with an income of $2,000 a month. When my second wife and I divorced, I lost most everything and my credit was ruined. I am trying to restore credit and pay my bills on time, but I still want to declare bankruptcy. Doesn't it take two years to get out of bankruptcy? Is there any hope for me?

A. Of course there is hope! Do not assume that you need to file bankruptcy until you have reviewed your options. A bankruptcy stays on your credit record for 10 years. Make an appointment with a non-profit consumer credit counseling agency. Call (800) 388-2227 to find one near you. A counselor can go over your finances, tell you what it would take to pay off your debts and restore your credit rating.

Online money map

Got a beef about the tax law or how the federal government spends your money? America Online (http:// government.aol.com/mynews) will tell you how to get in touch with your elected officials. You do not have to be an AOL subscriber to access the site.

_ Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731, or to huntleysptimes.com by e-mail.

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