Author Topic: Current Best Investment Opportunity!  (Read 4121 times)

Vindicated

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Current Best Investment Opportunity!
« on: July 19, 2017, 11:43:08 AM »
I saw someone post this on LinkedIn.  I'm just copy/pasting for their privacy.  Not sure if it's a viral thing going around or if it's something he came up with himself, but it gave me a giggle.

Quote
If you had purchased $1,000 of shares in Delta Airlines 2 years ago, you would have $49.00 today.

If you had purchased $1,000 of shares in Lehman Brothers 6 years ago and Northern Rock 5 years ago you would have nothing today.

But, if you had purchased $1,000 worth of beer one year ago at Tesco's, drunk all the beer, then taken the aluminium cans to the scrap metal dealer, you would have received $214.00.

Based on the above, the best current investment plan is to drink heavily & recycle.

MindfulMoney

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Re: Current Best Investment Opportunity!
« Reply #1 on: July 19, 2017, 12:04:09 PM »
I saw someone post this on LinkedIn.  I'm just copy/pasting for their privacy.  Not sure if it's a viral thing going around or if it's something he came up with himself, but it gave me a giggle.

Quote
If you had purchased $1,000 of shares in Delta Airlines 2 years ago, you would have $49.00 today.

If you had purchased $1,000 of shares in Lehman Brothers 6 years ago and Northern Rock 5 years ago you would have nothing today.

But, if you had purchased $1,000 worth of beer one year ago at Tesco's, drunk all the beer, then taken the aluminium cans to the scrap metal dealer, you would have received $214.00.

Based on the above, the best current investment plan is to drink heavily & recycle.
LOL


Sent from my iPhone using Tapatalk

slugline

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Re: Current Best Investment Opportunity!
« Reply #2 on: July 20, 2017, 10:17:09 AM »
Current recycling in my area prices aluminum cans for $.36/lb.

$214.00 divided by $.36/lb = 594.44 lbs aluminum

594.44 lbs aluminum multiplied by 31 cans/lb = 18427.78 cans of beer drank

$1000 spent on 18427.78 cans of beer works out to an original purchase price of about five cents per can of beer.

Hmmmmm. . . .
« Last Edit: July 20, 2017, 02:44:34 PM by slugline »

slugline

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Re: Current Best Investment Opportunity!
« Reply #3 on: July 20, 2017, 01:51:28 PM »
OK, now let's do an exercise where we run the numbers in reverse. A local grocery ad is listing 24-packs of Coors Light cans right now for about $21 each.

Ignoring the taxes, $1000 worth of Coors Light would be 1143 cans. Those empty cans would weigh 36.87 lbs and fetch us $13.27 at the recycling center. This result is better than zero but does confirm my suspicion that very little of your original money is waiting to be reclaimed from the empty cans.

frugalnacho

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Re: Current Best Investment Opportunity!
« Reply #4 on: July 20, 2017, 02:14:25 PM »
Current recycling in my area prices aluminum cans for $.36/lb.

$214.00 divided by $.36/lb = 594.44 lbs aluminum

594.44 lbs aluminum multiplied by 31 cans/lb = 18427.78 cans of beer drank

$1000 spent on 18954.29 cans of beer works out to an original purchase price of about five cents per can of beer.

Hmmmmm. . . .

I question the rest of the claims also.  Looking at delta's stock price, there has never been a time it dropped 95% in value.  Although none of them appear to back further than 2007.  What's up with that? Surely delta was a public company before 10 years ago?

sherr

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Re: Current Best Investment Opportunity!
« Reply #5 on: July 20, 2017, 10:58:54 PM »
I question the rest of the claims also.  Looking at delta's stock price, there has never been a time it dropped 95% in value.  Although none of them appear to back further than 2007.  What's up with that? Surely delta was a public company before 10 years ago?

Nah dude, Delta went bankrupt, shareholders got nothing, and then the new Delta emerged in '07 that still had all their planes and whatever. This "Delta" has literally only existed since 2007.

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As part of Monday's move, existing shares of Delta stock will be cancelled and current shareholders will not receive any compensation for their positions, the airline said. Shares of the new stock will start trading on the New York Stock Exchange on Thursday under the DAL symbol and be issued to creditors and some employees. A new logo will appear on more than 900 Delta and Delta Connection aircraft by the end of the year.
http://www.marketwatch.com/story/delta-air-lines-emerges-from-bankruptcy

slugline

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Re: Current Best Investment Opportunity!
« Reply #6 on: July 21, 2017, 08:17:05 AM »
So Delta got "rebooted" a lot like GM did? That's got to be a bang-your-head-against-the-wall experience if you were an old shareholder.

frugalnacho

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Re: Current Best Investment Opportunity!
« Reply #7 on: July 21, 2017, 08:23:12 AM »
I question the rest of the claims also.  Looking at delta's stock price, there has never been a time it dropped 95% in value.  Although none of them appear to back further than 2007.  What's up with that? Surely delta was a public company before 10 years ago?

Nah dude, Delta went bankrupt, shareholders got nothing, and then the new Delta emerged in '07 that still had all their planes and whatever. This "Delta" has literally only existed since 2007.

Quote
As part of Monday's move, existing shares of Delta stock will be cancelled and current shareholders will not receive any compensation for their positions, the airline said. Shares of the new stock will start trading on the New York Stock Exchange on Thursday under the DAL symbol and be issued to creditors and some employees. A new logo will appear on more than 900 Delta and Delta Connection aircraft by the end of the year.
http://www.marketwatch.com/story/delta-air-lines-emerges-from-bankruptcy

Do they remove the historic prices for dead companies?  I can't find any prices for old delta.

That's pretty shitty to go under then emerge "new" with new stock and no debt.

larmando

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Re: Current Best Investment Opportunity!
« Reply #8 on: August 03, 2017, 01:19:01 PM »
Do they remove the historic prices for dead companies?  I can't find any prices for old delta.

That's pretty shitty to go under then emerge "new" with new stock and no debt.

That's not what happens. Debt has the first claim, then shareholders have the residual claim.
So at minimum to be "rebooted" they're going to first declare bankrupcy, and then agree with their creditors on a repayment plan, or an equity swap of some portion of the debt. This makes sense as the values of the shares is the present value of the future profits. But if the company can't even make its commitments the future profits (after paying the debt holders) is 0, and thus the value of the shares is also 0.

larmando

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Re: Current Best Investment Opportunity!
« Reply #9 on: August 03, 2017, 01:25:16 PM »
Do they remove the historic prices for dead companies?  I can't find any prices for old delta.

That's pretty shitty to go under then emerge "new" with new stock and no debt.

That's not what happens. Debt has the first claim, then shareholders have the residual claim.
So at minimum to be "rebooted" they're going to first declare bankrupcy, and then agree with their creditors on a repayment plan, or an equity swap of some portion of the debt. This makes sense as the values of the shares is the present value of the future profits. But if the company can't even make its commitments the future profits (after paying the debt holders) is 0, and thus the value of the shares is also 0.

Looking at it another way, it was the management chosen by the shareholders that took on the debt (to expand or for other reasons). Taking debt actually increases shareholder return (as debt is usually cheaper than equity), and thus risk. The shareholders knew the debt was there (it was in the company's financial statement), and could at any point at minimum sell. When the debt became unsustainable instead of having to repay the debt (which was taken to increase their income) they could just walk away "for free" and didn't have to repay it. That's a pretty good deal for them as well. :)

zephyr911

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Re: Current Best Investment Opportunity!
« Reply #10 on: August 03, 2017, 01:47:18 PM »
Looking at it yet another way, this is a classic illustration of the risk-reward tradeoffs within what is known as the capital stack. There can be many levels - preferred stock, bondholders, first and second lienholders, etc... and common stock is usually at the bottom. Hence, in a bankruptcy, common shareholders are the most likely to lose their investment.

However, as you go up the stack, your increasing security is offset by a lower (more predictable) return; conversely, the lower security of common stock is rewarded in the aggregate by higher returns. Lenders only get the agreed-upon rate, even if the enterprise succeeds wildly. But common stock gets the lion's share of the excess returns. And the average of all the Deltas and the Facebooks and everything in between has historically worked out to 10% a year including dividends, which is what you're buying via your whole-market ETF if you're a typical member here.

Also, this is why many people gradually reallocate from stocks to bonds or other fixed-income assets. Fundamentally, you're just parking your assets at a higher position, with a lower return justified by lower risk.

robartsd

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Re: Current Best Investment Opportunity!
« Reply #11 on: August 03, 2017, 01:58:11 PM »
Current recycling in my area prices aluminum cans for $.36/lb.

$214.00 divided by $.36/lb = 594.44 lbs aluminum

594.44 lbs aluminum multiplied by 31 cans/lb = 18427.78 cans of beer drank

$1000 spent on 18427.78 cans of beer works out to an original purchase price of about five cents per can of beer.

Hmmmmm. . . .
In Michigan, the refundable deposit for beverage containers in $0.10, so $214 would only be 2140 cans. If the $214 deposit was part of the $1000, then each can would have been $0.37. Michigan does have a $25 daily limit per person on redemption, so you'd have to make 11 trips to a recycler to collect $214.

BFGirl

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Re: Current Best Investment Opportunity!
« Reply #12 on: August 03, 2017, 03:07:50 PM »
So Delta got "rebooted" a lot like GM did? That's got to be a bang-your-head-against-the-wall experience if you were an old shareholder.

It was :(