5. AMR Insanity
We here at the
have long deemed buying airline shares a dubious enterprise considering the sky-high rate of bankruptcies in the sector. Investing in flat-out bankrupt airlines like
, well, that's just plain dumb in our opinion.
Not that it's stopping a select group of schmucks mind you.
As pointed out by
eagle-eyed airline reporter Ted Reed, shares of AMR Corp., the parent company of American Airlines,
nearly 18% Tuesday on heavy volume, despite the fact that the stock is all but worthless. AMR traded up 8 cents to close at 53 cents, its highest price since Aug. 17. By contrast, shares in
New York Stock Exchange
delisted American, which had traded under the AMR symbol, on Jan. 5. Trading then moved to the
OTC Bulletin Board
Pink Sheets Electronic Quotation Service
with the shares getting a new symbol, AAMRQ.PK.
Nevertheless, while the company's stock now trades on the pink sheets, the shares are anything but in the pink. The existing shares have no intrinsic value and are certain to become worthless when the American bankruptcy case ends.
"It is possible that some traders believe AMR shares may benefit from the possibility that American pilots will approve a tentative contract agreement that has been endorsed by the Allied Pilots Association," theorizes Reed. "The miscalculation here is that pilots will receive newly-issued shares, not the ones that currently trade."
Some long-time Dumbest readers may remember that a similar phenomenon occurred following
bankruptcy, when shares of its post-bankruptcy shell company continued to trade under the moniker
. A slew of misinformed investors drove over the cliff in that case, convinced until the very end that their GM shares had actual value.
This time, however, the suckers are leaving on a jet plane. And we know full well they won't be back again.