– Once in a while, people
will ask me about a company which is trading at excessively low prices because they’re going bankrupt. And even sometimes when they ask about it, they don’t notice that
the company’s bankrupt but they want to say, for example, we’ll use GM in our video here. GM went bankrupt. The share price was
really low at that point and going towards zero of course. But people would say,
“But GM still builds cars “and they’re still a huge company. “How can it not be a good investment “to buy the shares at five cents?” I’m gonna tell you why it’s
a really bad investment and what you’re missing
about bankrupt shares. If this is your first time
here, my name is Peter Leeds. This is where I show you how
to turn a small amount of money into something much more significant. And we’re going to stick
with GM here for our example for this video. You guys have been asking about
bankrupt shares sometimes, and this is what happens. These shares are trading
at very low values, and they continue to trade, and the company continues to operate. So how could it not be a
good idea to buy the shares on the cheap? Well, here’s what happens. When a company goes bankrupt, the shareholders wind
up usually getting zero or maybe a very, very little bit, pennies on the dollar at
most, but almost always zero. GM, in this example, they go bankrupt and all of their assets are actually owned and go to the financiers,
the banks, the bondholders. People who own the shares get zero. They get wiped out. Then the company makes
a new type of share, a different class of GM shares called something different temporarily until a few months later, those original GM shares
get canceled, worth zero. They were at five cents. Maybe you thought they’re worth more. Sometimes they even rise in price because so many people
misunderstand bankrupt companies so they buy the shares but
those shares get canceled. You lose 100%. People say, “How much could
you lose? It’s down so low.” The answer is 100%. You can always lose every penny
of every dollar you invest. It’s 100% gone. All of the company GM continues to operate and the financiers, the banks,
will restructure the company, keep it running, put some
money in to keep the lights on so to speak, and restructure, rebuilt it, so that it continues to make money. And then they have the new class of shares which they issue, which get bought by a lot
of institutional investors. So then there’s the
new class of GM shares. Those are the ones that
are now going to have all the value. So when you see a company,
if their ticker symbol ends with the letter Q, it’s
a five-letter ticker symbol that ends with Q or any number
of letters that ends with Q, that means that they’re bankrupt. Do not trade or buy bankrupt companies. There’s just a little bit
of oscillation or volatility for a few months while the
paperwork gets processed and while the shares are
getting set up to be canceled and discontinued. And people misunderstand that to say, “Oh, it’s good time to buy
the shares at a low price.” It is not. It’s an absolute dead end. It’s a trainwreck. It’s a waste of 100% of
whatever money you put into it unless you can get out by
selling it to a bigger sucker before the day of reckoning. And don’t forget to swing
over to peterleeds.com and get your free copy
of the Market Manifest. There’s five people who worked
on this project together. It took us thousands of dollars, decades and decades of
experience to built this. And I need you guys to get your free copy of the Market Manifest because
there are a lot of concepts and ideas in there that will
instantly and easily help you become a better investor, just in a matter of half of an hour by reading a few pages in there. Thanks so much, guys.