Imagine checking your portfolio and finding that
one of your stocks just dropped 90 ninety percent when it opened
for trading. That's what happened yesterday to shareholders of American
Home Mortgage (AHM),
a real estate investment trust (REIT) in the mortgage lending business.
After announcing that it would be unable to make margin calls,
pay other outstanding debts and that it credit sources had dried
up, AHM fell from $10.47 to close at $1.04. Common shares of the
stock will probably become worthless or next to worthless as the
company restructures or goes bankrupt.
On July 4, 2007, with the stock at $18.26, buyupside.com
warned investors to avoid AHM in the article Beware
of American Home Mortgage.
I (RAH) did not know that the
stock was about to collapse, but the steep downside price pattern
told me to avoid the stock. The demise of American Home Mortgage
is another example of why it is imperative to avoid buying on the
downside. Investors seeking "bargain prices" as this stock
price declined got badly burned.
Related Articles:
buyupside.com
Articles About the Price Downside
Homebuilding
Stocks
Mortgage
Investment REITs
Real Estate Investment
Trusts (REITs) Stocks Pay High Dividends
Posted August 1, 2007.
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