The Bankrupt Stock Casino Stays Open

Oooh, Superfly
You’re gonna make your fortune by and by
But if you lose, don’t ask no questions why
The only game you know is Do or Die

-from Superfly by Curtis Mayfield

I got a call the other day from a friend of mine looking to buy shares of bankrupt Lehman Brothers, which now trades on the Pink Sheets.

The conversation went something like this:

Barry:  Yo JB, what price is Lehman trading at now?

Me:  Umm, I guess pennies, it shouldn’t be trading at all, there’s probably nothing left for common stockholders.

Barry:  Yeah yeah yeah, buy me $20,000 worth, I think it’s gonna bounce.

Me:  Bounce?  Bounce off of what, it’s grave?  It’s at 5 cents on the Pink Sheets!  I’m not buying that for you, do it somewhere else, Cuz.

Barry’s reckless optimism must be excused, as he is a commercial real estate executive in Manhattan, firmly entrenched in what we all know is The Last Bubble (yes, they are still waiting for the return of the hedge fund to beef up square footage occupancy and prices…lol).

For the life of me, I can’t understand why the SEC doesn’t shut this bankrupt stock game down, it’s the ultimate cess pool.  Betting on the shares of bankrupt companies is like betting on a longshot horse, only the horse has two broken ankles and a drunken jockey riding it. 

Is there money to be made speculating on a bankrupt company’s stock?  I guess, but it’s all Greater Fool Theory stuff.

There’s also money to be made fighting Jean Claude Van Damme in an underground parking garage tournament, does that mean it should be encouraged?

Lehman Brothers Holdings (LEHMQ.PK) averaged 5.5 million shares a day this summer, which means a combination of naïfs, knaves and scalp collectors were very busy.

Oh yeah, Barry sure wasn’t happy that I attempted to protect him when LEHMQ traded from a nickel to over 30 cents yesterday:

LEHMQ 10 Day Chart

No good deed goes unpunished!