WAMU Bankruptcy

Adding the “Q” to WAMU – From a Blue Chip to a Penny Stock

“Zombie Stocks” Trading as Penny Stocks: WAMUQ , LEHMQ. If you see a “Q” at the end of a stock symbol take it with a grain of salt. And if you do decide to buy the stock, only risk capital that you can afford to lose. As we all know many investors are lured to penny stocks. The hope of a large percentage gain often outweighs the fear of losing money. However, there is a difference between buying hot penny stocks with good prospects and buying a Zombie Stock.

A Zombie stock is generally a company that is near bankruptcy. When the market crashed in 2009 blue chip companies like General Motors, Washington Mutual, Lehman Brothers and AIG filed bankruptcy, causing both retail investors and institutions to take massive losses.

Consequently, these stocks were delisted from the NYSE and traded on the Pink Sheets. They are now classified as “Zombie Stocks“. Now don’t get me wrong there is a niche market for these types of securities. There are investors who flip penny stocks everyday. They move in an out of the stock trying to scalp a 2 to 10% gain. There are also other retail investors who generally are not active penny stock buyers, that will step in on fallen blue chips and view the investment as you would a lottery ticket. Some catalysts for buying Zombie Stocks are massive liquidity and news sensitivity. While most people who engage in this practice eventually lose money, there are some who double, triple or even quadruple their funds in a very short time period. While some view stocks like WAMUQ as a trading paradise, there are probably easier ways to make money in the market.