Bankruptcy turnaround might not improve stock

Dear Bruce: I have quite a few shares of stock in a large company that is in financial decline. Any day they may file for bankruptcy, but if they do, I believe they will reorganize and come back strong. I bought these shares at their lowest. Even though the stock may fall even lower, don’t you think that after bankruptcy, if I hold onto this stock long enough it can be worthwhile? Normally, I’m not a gambler, but I’m taking a chance on this one. What do you think? – E.D., via e-mail

Dear E.D.: If the stock is in the dumper, why not continue to hang on since you will get little, if anything, for your existing shares? Understand this; often when a company reorganizes after bankruptcy, the stockholders get absolutely nothing. The company will issue new stock and it may or may not prosper. The fact is that if these shares are almost worthless, you might wish to continue to gamble, as I have. On a couple of occasions I have done well, and on others I have lost my entire investment.

Dear Bruce: A computer containing the names, addresses and Social Security numbers of all of the teachers in my school district was stolen three weeks ago. We have been given conflicting advice on what to do. Some teachers are concerned about calling the credit bureaus and flagging their accounts. We are being told that the computer was password protected, but we all know kids who hack. We were also told to pull our credit reports to look for anything suspicious, but some people are saying that can have a negative effect on your credit – too many inquiries. If you could give me any advice I would really appreciate it. Thank you. – Lisa in Wisconsin

Dear Lisa: I wouldn’t get too upset about this. Names and Social Security numbers are not at all hard to come by. Many accounts, as you point out, can be hacked.

Pulling your credit report has no negative affect on your credit. Inquiries that you make yourself have no positive or negative value. It pays to pull your credit report from time to time, and if you see something suspicious, notify the issuer of the report.

As far as having your accounts flagged, etc., is concerned, frankly I think that’s overkill. I truly don’t believe you have a whole lot to worry about.

Dear Bruce: My husband and I are interested in giving our grandchildren shares of stocks for special occasions. We’ve contacted financial advisers, who told us that we would have to give $1,000 or more. We know there are stocks that you can buy for about $100 and add to them even smaller amounts of money. What do you suggest? – N.H., Benton Harbor, Mich.

Dear N.H.: Don’t even consider such a plan. Small amounts of stock scattered around may sound like a good idea, but certificates get lost and are costly to replace. In theory, when the kids turn 18, they could sell them and there is nothing that you or their parents could do. You would be far better off to consider giving them to the parents in trust for their children.

I would not establish a separate account in their name unless the amounts are significant; the expenses and the trouble are just not worth it. Many people used to give savings bonds in the kids’ names, but the troublesome part of that equation is that savings bonds have a very modest return, and we have the same difficulty where the kids may have control of monies that they should not have until they are financially mature.

Bruce Williams is a national radio talk show host and syndicated columnist.