A Fool And His Money Are Soon Parted

Anybody who has participated in the stock market for a reasonable amount of time has made a trade that they kick themselves over.  You buy a stock only to see its value plummet soon after or you sell a stock just before it skyrockets.  Both have certainly happened to me before.  Do you know what hasn’t happened to me before, though?  Buying the wrong stock.

Twitter, a company who has made absolutely no money yet, recently filed for an initial public offering (IPO) of stock.  The IPO will not likely happen until Thanksgiving.  That fact did not stop many an intrepid investor from trying to buy the stock immediately.  So off to their computers they went with visions of dollar signs dancing in their heads.  And what do you buy when the company you want to buy doesn’t exist?  Well, Tweeter, of course!

What is Tweeter, you ask?  Tweeter is a company that no longer exists.  It was a higher end audio/visual component sales store that went bankrupt in 2007.  Investors, poured money into the bankrupt stock raising its value over 1400%.  14.4 million shares were traded one day on a stock that normally has under 30,000 shares traded a day.

Those all sound like big numbers, but we’re talking about a stock that was trading at a penny at the start of this.  My guess is only a million dollars or so actually traded hands.  Too bad we can’t see how many people were actually involved in this flub.  My gut tells me that it was just a handful of people.  It was enough for the Security and Exchange Commission to change the ticker symbol of the stock though.

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