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Don't Invest If You Don't Know What You're Doing


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#1 LFC

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Posted 18 June 2020 - 01:27 PM

This is actually quite sad. The kid was only 20 and jumped in way over his head or even basic understanding. He may have had little real indebtedness but didn't understand the numbers on his screen.

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The note found on his computer by his parents on June 12, 2020, asked a simple question. “How was a 20 year old with no income able to get assigned almost a million dollars worth of leverage?” The tragic message was written by Alexander E. Kearns, a 20-year-old student at the University of Nebraska, home from college and living with his parents in Naperville, Illinois. Earlier that day, Kearns took his own life.

Like so many others, Kearns took up stock investing during the pandemic, signing up with Millennial-focused brokerage firm Robinhood, which offers commission-free trading, a fun and easy-to-use mobile app and even awards new customers free shares of stock. During the first quarter of 2020, Robinhood added a record 3 million new accounts to its platform. As the Covid-19 stock market swung wildly, Kearns had begun experimenting, trading options. His final note, filled with anger toward Robinhood, says that he had “no clue” what he was doing.

In fact, a screenshot from Kearns’ mobile phone reveals that while his account had a negative $730,165 cash balance displayed in red, it may not have represented uncollateralized indebtedness at all, but rather his temporary balance until the stocks underlying his assigned options actually settled into his account.


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“I thought everything was going fine,” says Bill Brewster, Kearns’ cousin-in-law and a research analyst at Chicago-based Sullimar Capital Group. His father said he was loving the markets and really enjoying investing, Brewster told Forbes, “and then on Friday night, we got this call from his mom, and he had died.”

Kearns apparently fell into despair late Thursday night after looking at his Robinhood account, which appeared to have $16,000 in it but also showed a cash balance of negative $730,165. In his final note, seen by Forbes, Kearns insisted that he never authorized margin trading and was shocked to find his small account could rack up such an apparent loss.

“When he saw that $730,000 number as a negative, he thought that he had blown up his entire future,” says Brewster. “I mean this is a kid that when he was younger was so conscious about savings.”


Never authorized margin trading? I smell an investigation and possibly a HUGE lawsuit.
" 'Individual conscience' means that women only get contraceptives if their employers, their physicians, their pharmacists, their husbands and/or fathers, pastors, and possibly their mayors, Governors, State Secretaries of Health, Congressmen, Senators, and President all agree that in that particular case they're justifiable." --D.C. Sessions

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#2 LFC

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Posted 18 June 2020 - 02:30 PM

This is just slimy.

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Hertz Suspends $500 Million Stock Sale Pending SEC Review

Get Report reportedly is suspending its planned $500 million stock sale pending a review by the Securities and Exchange Commission after the rental-car giant said the shares "could ultimately be worthless."

CNBC reported the suspension of the sale. Hertz shares were halted Wednesday.

The Estero, Fla., company has been hammered by the coronavirus pandemic shutdown.

The collapse in the global travel industry overwhelmed its ability to reach long-term agreements with creditors on reduced payments, forcing the company to seek protection from creditors under the bankruptcy laws.

Earlier SEC Chairman Jay Clayton told CNBC that the commission had "comments" about the controversial sale.

“In this particular situation we have let the company know that we have comments on their disclosure,” SEC Chairman Jay Clayton said. “In most cases when you let a company know that the SEC has comments on their disclosure, they do not go forward until those comments are resolved.”

On Monday Hertz filed with the SEC to sell $500 million of stock. Hertz told the court it would alert buyers of the new shares that common stock in the company "could ultimately be worthless” once its bankruptcy proceedings are concluded.

"The SEC is basically telling Hertz that it has a problem with the idea of selling $500 million of stock to the public when the company acknowledges that shareholders are probably going to lose everything," said David Dierking, Editor of ETF Focus on TheStreet.

Dierking added that "lots of smaller retail investors are buying up shares of distressed companies like Hertz hoping that a post-COVID economic rebound can save the company and investors can see huge profits."

"In reality, when a company files for bankruptcy protection, it's usually the end of the line," he said. "Since common shareholders fall behind bond and preferred stock holders in the pecking order, they're usually left with nothing. I'm certain that the SEC wants to prevent this scenario from happening."

The company said in the filing that equity holders would not see a recovery from any bankruptcy plan unless those with more senior claims, including bondholders, are paid in full.

Hertz said this would "require a significant and rapid and currently unanticipated improvement in business conditions to pre-covid-19 or close to pre-covid-19 levels."

Last week, Judge Mary Walrath of the U.S. Bankruptcy Court in Delaware said that Hertz, which filed for Chapter 11 protection on May 22 with nearly $20 billion in debts, could raise as much as $1 billion through the sale of new shares.

" 'Individual conscience' means that women only get contraceptives if their employers, their physicians, their pharmacists, their husbands and/or fathers, pastors, and possibly their mayors, Governors, State Secretaries of Health, Congressmen, Senators, and President all agree that in that particular case they're justifiable." --D.C. Sessions

"That's the problem with being implacable foes - no one has any incentive to treat you as anything more than an obstacle to be overcome."

"The 'Road to Serfdom' is really all right turns." --Progressive Whisperer

""The GOP ... where every accusation is also a confession." --Progressive Whisperer

#3 Practical Girl

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Posted 22 June 2020 - 09:15 PM

Not fun, but sort of interesting. The global car market has been scared spitless, with the Hertz breakdown. The stock stuff is…just slimy. Yes. But?

Within this, is the idea that the demand is still there. People still need cars. The fear is OMG- what happens when they, and Enterprise and on and on, flood the market? Bloodbath, for the other guys out there. Weird stuff happening out there. Not only are manufactures sllllllloooowwwing down, on production, but the auctions (used cars) are stagnant. In many big markets, no longer existing. Good luck, rental car companies.

I wouldn't buy a car, today, on a bet. Hey, look- I actually know- work with- some of the largest retailers in the US. Yes. I own the stocks. HAHA. You bet- they all still have their off shore accounts. Individuals… Oh yeah. They are also busy ripping the heads off customers, right now, and even though their volume is way down, their profits are setting records.

REALLY? I ask, what kind of story am I supposed to tell, now. Shoot, I've chosen to say, as my son said when he was 2 years old- to be definitive-no, no and more no.
Every woman needs a blowtorch.
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--- On September 17, 1787, as Benjamin Franklin was leaving the deliberations of the Constitutional Convention, at Independence Hall, in Philadelphia, a woman called out to him, saying, “Well, Doctor, what have we got, a republic or a monarchy?”
“A republic,” Franklin said, “if you can keep it.”


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#4 George Rowell

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Posted 26 June 2020 - 06:22 AM

If you are going to learn the stock market then learning with someone else's money is the way to go.
A doctor knows a little about a lot. A specialist knows a lot about a little. In time the doctor knows less and less about more and more and the specialist knows more and more about less and less until ultimately the doctor knows nothing about everything and the specialist knows everything about nothing.





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