1. Your Questions About Stocks To Buy
John asks…
Stocks. After the underwriter buys the ipo, how does the issuing
company buy stocks back?
If i got this straight the underwriters own the stock not them. There involvement in the stock
ends when the underwriters purchased them. If you were subject to a stock buy-back who did
the request come from? The issuing company or the underwriter? Also...when individual
borrows said stock from broker, are you borrowing a piece of the company or are you borrowing
a said piece of paper from brokerage?
Steve Winston answers:
Not quite - the underwriters do buy the stock from the company, but the goal is not to hold the
stock but to sell the stock to investors. IN a successful IPO, at the end, the underwriters own no
stock (well, at least no stock that they didn't want to hold).
In a stock buy-back, it is the company making the offer to buy-back the stock. This is done when
the company either wants to go private (in which case it buys back 100% of outstanding stock)
or when the company wants to decrease the amount of stock on the open market (for any of a
number of reasons).
In the last case, you are talking a short sale. In this case, the seller borrows the stock from the
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2. broker, who then borrows the stock from the accounts of other people who have trading
accounts with the broker. Since a share of stock is a share of the company, in essence you are
borrowing a piece of the company, except you never own that piece of the company so in
reality, you are really taking a loan from another investor which you must pay back.
Steven asks…
What are some good buy opportunities for stocks during this
recession?
Given that a lot of stocks are down at the moment, what are some good buy opportunities? I
don't want to buy stock that will keep going down and be worthless, but if there are some good
buys now that are safe I'd like to invest in some. I can afford to wait a while if it means a good
turnaround.
Steve Winston answers:
If you want cheap and safe stock and invest on long term i suggest you should buy C, and BAC
because government will never let these big bank fail
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3. Daniel asks…
What stocks should i buy for a short term investment?
I'm the Stock Market Club, and i need to know which company's stocks i should invest in as a
short term investment. Please state the company and the reason. Note* I can only buy stocks
that are part of the TSX. Thankyou!
Steve Winston answers:
Those with the highest yield which will be going X-dividend in your "short term"
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4. Linda asks…
What stocks should you buy if oil is going up?
I'm studying economics and I want to know, now that oil is going up, what stocks should people
buy? What stocks should people short sell? I assume airline stocks should short sell since oil
will lower their stocks, while buying stocks for oil is good?
Steve Winston answers:
Canacol Energy (CNE)
its already made me a small fortune as i bought it @ 0.52 CAD ages ago ..
Thomas asks…
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5. How do you buy stocks and how do you make money from it?
Let's say I want to buy stock in Honda and their price is $50/stock.
So I want to buy 100 stocks. Do I pay $5000? Then how do I make money? If the stock moves
up to $55/stock that day, I would make $500? Then I can withdraw all my money and make
$500? Is that how it works?
Steve Winston answers:
Basically that is how it works (although you should not expect a 10% price jump in one day).
The only qualified is that you will have to pay a brokerage fee when you buy the stock and then
again when you sell, so you won't make the entire $500. Fees can range from $5 per trade on
up depending on the broker.
Most brokers need an account set up with a deposit before you can trade.
William asks…
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6. What online website should I use to buy stocks?
I was just at E-trade, and they said that my options would expire after like 1 year, and I would
have to buy or sell my stock? If I already bought my stock, why would I buy it again? I never
heard of Stocks Expiring one year after buying them. Can some one please help me out?
Steve Winston answers:
If I understand you right, what you purchased from etrade is "Options". RIght? If yes, then yes
they do expire, unlike Stocks which do not.
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