Shares!!!

[just_pondlife]

I got a few shares in northern rock, if they get bought out,all well and good; hopefully they will go up and i will get my money back.

My question is this! what happens to my shares if the company is nationalised?

Thanks Kev. ( yes, i know, should have ditched them ages ago!)

 

[Jack o'Clubs]

they go to zero.

see Railtrack for a similar example...

if I were you I would sell now: on a risk adjusted basis I'd say that they're overvalued: I certainly don't see anyone queuing up to offer more for the equity than its current valuation.

 

[just_pondlife]

do I still have the shares, and they have to gain value again, or do i just loose my money because i have no more shares?

 

[Jack o'Clubs]

do I still have the shares, and they have to gain value again, or do i just loose my money because i have no more shares?

no, you lose the shares. The government would own the company, not the shareholders, or to put it another way, they would be the only shareholder.

 

[shadowninja]

That's annoying. Then again, buying shares in NRK was hellishly risky in the last month. I know quite a few guys through different forums who thought they were cheap at 300, 250, 150 etc. Every time it moved and I got tempted, I just muttered the first line in my signature!

 

[arabianights]

This is a very interesting question that has been studied many times in behavioural economics, whether to take a certain loss versus gambling with a possibility, and expectancy, of even greater loss to try and get out of the losing position. It turns out that humans are not at all rational here, I can expand upon this if anyone is interested as the results are very important for trading.

The rational thing to do would be to subtract your transaction costs if you were to sell from the current price. If you would not buy the shares at this price then you should sell them.

 

[shadowninja]

The rational thing to do would be to subtract your transaction costs if you were to sell from the current price. If you would not buy the shares at this price then you should sell them.

Problem with this way of thinking is that people then do the averaging down trick...

 

[arabianights]

Well yeah, averaging is a great plan using this logic - it's a way to get filled for a bigger position at a better price. Of course this logic in both cases ignores risk. If you average then you are increasing your risk, which makes it less attractive than the logic would suggest, but if the OP were to sell his shares he would decrease his risk, which actually makes selling them slightly more attractive than my analysis would suggest.

 

[just_pondlife]

Me Shares

thing is, do I sell or not??? With some prospective buyers pulling out but others offering better deals, I dont know what to do?
I thought when 2 top runners pulled out friday the shares would plummet, so i nearly made the call to sell, but held on to see them end up 7p on the day!!!
The feedback from here I think is to sell now, can anyone offer a more positive attitude to my dilemma

 

[arabianights]

Which would you regret more? Selling and northern rock being bought out for twice what you paid, or not selling and your shares becoming worthless. Therein lies your answer - aim to minimize regret. It is fairly clear that the government will not allow northern rock to collapse entirely, but that doesn't mean that the shareholders will get anything. In terms of where the share price will soon be heading, in truth noone except for insiders has a clue. Personally I would be neither long nor short Northern Rock with my own money, it's just too risky.

 

[just_pondlife]

I watch bloomberg for most of my inspiration (for now) where to lay my bets down,and last friday at 7.35 the top tip of the morning was Northern rock to lose at least 5 more points by end of day, but 7 points gained!!! so yes, noone knows I think.. if i were to make a call on NRK, now, im going to have to go with the bullish, or i dont think I could sleep at night thinking i may loose more money!!!

 

[Trader333]

Have you considered joining the Technical Trader forum ? It is good for US stock trading strategies.


Paul

 

[just_pondlife]

open to options

Im just an engineer from south wales, and spread betting is all new to me, but getting into the swing of it with all the help im getting from all the members here. Im tryiing to specialise in something, but dont know what yet...messages on a postcard please

 

[arabianights]

I wouldn't take any tips off bloomberg without seriously considering the logic of the guest's advice yourself - they all seem to contradict each other, although Jimmy Rogers is great. The only saving graces are Suzzane o'halloran and julie hymen, and they're not very good looking... That guy in the afternoon who looks like a leprechaun seems to know his stuff though.
(Yes I do have to sit next to a plasma with this irritating channel on all day, why do you ask?)

 

[just_pondlife]

I wasnt asking a question, just making a point that noone seems to know what call to make on NRK? even bloomberg got it wrong friday, dont know his name, but the guy from cantor (with glasses) normally gives some sound calls; easyjet was easy money thursday, and RBS was easy money wednesday....