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CDPR Sued For Securities Violations
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<blockquote data-quote="embee" data-source="post: 8159624" data-attributes="member: 7026827"><p>You assume that you, as a shareholder, are only interested in selling at the maximum amount at any given point in time.</p><p></p><p>You may be interested in increasing your position now that the share price is lower, increasing your equity in the company at a lower cost. This is known as "buying on bad news." The trick is knowing whether there is an acute problem that can (and hopefully will) be fixed or the problem is systemic.</p><p></p><p>Example 1: Buying shares of airline stocks after news of pandemic travel bans. Airline stocks plummeted in mid-February, and lost 2/3 of their share price in the next 30 days. One would buy on the bad news - while the price is plummeting - because airlines are a major part of the global economy and world governments have a vested interest in bailing them out to ensure travel continues. It's an acute problem.</p><p></p><p>Example 2: Buying shares of department store companies (like Macy's). The clothing retail sector has completely changed over the past decade. Macy's was trading at $70 in 2015. It's at $10 now. Times changed and brick and mortar is on a decline, evidenced by a parade of retail bankruptcies. That's a systemic problem.</p><p></p><p>So that's the trick...</p><p></p><p>Bringing it all back, what do you do with movie theatre companies like AMC, Regal, and Carmike?</p><p></p><p>Sure, people want to go to the movies. But can a movie theatre chain remain solvent? Solvent is a term that means "able to meet liabilities as they come due." These companies owe tons in rent and mortgage arrearage and don't know when they'll be able to generate any revenue. And when they do generate revenue, WB and Disney automatically take half of what comes in.</p><p></p><p>Is their problem acute or systemic? </p><p></p><p>Welcome to the world of high finance!</p></blockquote><p></p>
[QUOTE="embee, post: 8159624, member: 7026827"] You assume that you, as a shareholder, are only interested in selling at the maximum amount at any given point in time. You may be interested in increasing your position now that the share price is lower, increasing your equity in the company at a lower cost. This is known as "buying on bad news." The trick is knowing whether there is an acute problem that can (and hopefully will) be fixed or the problem is systemic. Example 1: Buying shares of airline stocks after news of pandemic travel bans. Airline stocks plummeted in mid-February, and lost 2/3 of their share price in the next 30 days. One would buy on the bad news - while the price is plummeting - because airlines are a major part of the global economy and world governments have a vested interest in bailing them out to ensure travel continues. It's an acute problem. Example 2: Buying shares of department store companies (like Macy's). The clothing retail sector has completely changed over the past decade. Macy's was trading at $70 in 2015. It's at $10 now. Times changed and brick and mortar is on a decline, evidenced by a parade of retail bankruptcies. That's a systemic problem. So that's the trick... Bringing it all back, what do you do with movie theatre companies like AMC, Regal, and Carmike? Sure, people want to go to the movies. But can a movie theatre chain remain solvent? Solvent is a term that means "able to meet liabilities as they come due." These companies owe tons in rent and mortgage arrearage and don't know when they'll be able to generate any revenue. And when they do generate revenue, WB and Disney automatically take half of what comes in. Is their problem acute or systemic? Welcome to the world of high finance! [/QUOTE]
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