Buying Shares

tradetime

BB78 wrote: »

Is it insider trading if you're not linked to either company in anyway? & if you only know they are being taken over?
Seriously is it illegal to use information you've innocently over heard??

Well if you truly had "overheard" the information then it would be very hard to prove, because there would be no-one to bring forward from an investigation to say "Yes I told him." and you are unlikely to be trading in any size to draw attention.
My point is, that it is an illegal activity, and like any other criminal act, you don't really want to be discussing it on a BB. Let's face it if you were a burglar by night, you wouldn't be on here discussing likely targets for this weeks work now would you?

As to what is an insider, apart from the obvious, I'm not sure about the UK as I trade mostly US, but the SEC, which regulates US trading, has a provision for what it calls, "Temporary" or "constructive access" This means that if someone with material access to information tells you, you now become a temporary insider, it is every bit as illegal for you to trade on that information before it becomes public knowledge as it is for him.
As I say in reality, it's a very different thing to prove unless there has been some obvious conspiracy, but again my point was you don't really want to be talking about it on a bb.

sunny_skies

thank you tradetime! just saw your reply now. off to investigate.

pumpndump

BB78 wrote: »

I'm looking at buying some shares but really don't know anything about the stock market & have a couple of questions.

1) When people lose money in shares is that because the company has collapsed?

2) If I've got the money in savings although I'm not earning interest anymore as long as I sell the shares for more than I bought them I haven't lost anything?

3) If I have £100 of shares & the price drops & the shares are now only worth £50 I've lost out but is that only if I was to sell them? If I just kept hold of them & hope/wait for their worth to go back up I haven't lost anything?

4) If I have 100 shares in company A that are worth £1 each & they are bought by company B whose shares are worth £5 each are my shares then worth £5 each?

1. There are several ways to lose money on the market. The way you mention is just one of them.

2. If your question means that so long as you sell before your settlement date do you get to keep the profit, the answer is yes. And, of course, if your shares lose value, you will have to settle at the price YOU BOUGHT AT.

3) Yes, you are correct your loss is on paper. I would, however, study stop-loss systems, and you might get to keep your shirt.

4) Absolutely not. When your company is taken over a price per share is agreedbetween the two companies. That is the price you will be paid, which may be substantially less than you originally paid for them. Another alternative is that you may be allocated shares in the predator company in lieu of hard cash.

Do not think me rude, but I suggest you study investments and markets a lot more before you go out on the markets. Your apparent lack of knowledge will hit you hard in the pocket.