I’m not much of a financial guy. I HATED the mandatory “economics” class I was required to take those many years ago in high school. (Oddly, I loved history and almost completed a master’s degree in history.) As an investor, I’ve only lost money, even before this horrendously bizarre stock market of the last few months.
So when I hear about anything financial, even something as simple as 0% balance transfers, I tend to go slack-jawed. Throw in even a little touch of such terminology as “futures options,” and you’ve already lost me when it comes to pretty much any finances and investing. I’ve learned how to pay some of my bills online, as has my wife, and that’s about all I do online financially.
But my son, happily, has become quite the investor. Unhappily, he’s lost — as have millions of Americans — a lot of money in the recent stock market debacles. (See? I understand the world “debacle” but like millions of others, it’s “stock market” I really don’t get.)
One thing my son has explained to me regarding stocks and evaluating stocks is the concept of the “book value” of a company. That’s pretty simple, really, if I got what he told me. It means this: If a company were to shut down today and sell off everything, pay all its debts, whatever is left over is the “book value” of the company which would be split up among the owners, in this case the stock holders. When a company has a “negative book value” that’s very, very bad for investors. That means if it sold off completely, it would still owe money — and stock holders would get NOTHING.
So my advice for you today, and it really isn’t worth much but, what the heck — stay away from buying stock in negative book value companies.
Now go out and do something with your day. Step away from the computer and LEAVE that stock alone for a few days, will ya?