Released: August 16, 2007

Keep safe distance from bankrupt stocks

Source: Michelle Singletary, Washington Post (Free Registration)

Some investors see the troubles in the mortgage and real estate industries as an opportunity to go bargain-hunting for depressed but basically solid stocks.

And then there are those who buy stock in companies that have filed for Chapter 11 bankruptcy protection, betting that these distressed shares, now trading for pennies, will rise rapidly once the companies emerge from bankruptcy.

If you count yourself among the latter group, you would be better off playing a slot machine. Chances are, if you own stock in a company that has filed for bankruptcy, that stock will eventually become worthless. 

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