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Your Questions About Stocks To Buy

Sandra asks‌

Stocks. After the underwriter buys the ipo, how does the issuing company buy stocks back? If i got this straight the underwriters own the stock not them. There involvement in the stock ends when the underwriters purchased them. If you were subject to a stock buy-back who did the request come from? The issuing company or the underwriter? Also...when individual borrows said stock from broker, are you borrowing a piece of the company or are you borrowing a said piece of paper from brokerage?

Steve Winston answers: Not quite - the underwriters do buy the stock from the company, but the goal is not to hold the stock but to sell the stock to investors. IN a successful IPO, at the end, the underwriters own no stock (well, at least no stock that they didn't want to hold). In a stock buy-back, it is the company making the offer to buy-back the stock. This is done when the company either wants to go private (in which case it buys back 100% of outstanding stock) or when the company wants to decrease the amount of stock on the open market (for any of a number of reasons). In the last case, you are talking a short sale. In this case, the seller borrows the stock from the


broker, who then borrows the stock from the accounts of other people who have trading accounts with the broker. Since a share of stock is a share of the company, in essence you are borrowing a piece of the company, except you never own that piece of the company so in reality, you are really taking a loan from another investor which you must pay back.

James asks‌

What are some good buy opportunities for stocks during this recession? Given that a lot of stocks are down at the moment, what are some good buy opportunities? I don't want to buy stock that will keep going down and be worthless, but if there are some good buys now that are safe I'd like to invest in some. I can afford to wait a while if it means a good turnaround.

Steve Winston answers: If you want cheap and safe stock and invest on long term i suggest you should buy C, and BAC because government will never let these big bank fail


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