You can be a stock market genius summary
It may seem that those who get profits in the stock market have just got much better luck then you do, well maybe not.
1.Why you need spinoffs
spin off is when a company converts it’s own sub division into a completely different company. This means that this new company will have its own bills, bathrooms, chairs and even its very own stocks. Spin offs have beaten the S&P index by 10% for 25 years straight. At first most people would ignore the company and pay more attention to the parent company, and this will cause the analysts to ignore this company. However, because this company is small, the directors will find it easy to control, thus its price will grow and everyone will notice it. So, you should be smart enough to buy these companies from the beginning
2.The purchasing of a company and it’s bonds
When a big company buys a small one it is called acquisition and when a big company works with a small company it is called merging. There are 3 ways a company can buy another company.
The first way of payment is stocks. The big company can announce that the smaller company will be bought for $30 whereas right now its value is $20. The company will rush to get to $30 and the investors of this small company will win.
The second way of payment is by cash. This is given to the small company directors so the big company can purchase it.
The third way is increasing bond face value. Lets say the small company has really cheap bonds because nobody is interested in it. That’s when you come in, you buy these bonds because you are smart enough to know about the acquisition. By 10 years its face value has increased.
3.Dangers for an investor during an acquisition
The danger in acquisition is when the payment is in stocks . If suddenly the big company doesn’t want the small company, the small company’s price would crash. Also, if some issues occurred among the bigger company and couldn’t afford the smaller company, either way the small company’s price would drop
4.What does it mean if a sub division is shut down
Lets take the example of a huge company which has got a pharma, food and automobile division. This company’s stock price is $40 . This is because the pharma division is profiting by $20, the food division by $30 however the automobile division is losing by $10. If they close the automobile division which is pulling them down their stock’s price will be $50 instead of $40.
There are 2 things you need to remember for life if you are certain about investing
1)Do your homework=When is the deadline : When you hear a simple news to when you want profits.
2)Don’t trust anybody!