Does the stock price just plummet or does it "go to 0" so to say...as in "no more stock for you!" ?
Oh one more question: How does the whole tax business work with stocks? Is it just 50% of the profit you make taxable and if so what's the % that is taxed on that 50%...I know it has something to do with being a long vs. short term trader but I can't find the exact percentages...

Sorry for the really basic questions...I'm trying to get this whole trading thing.

I dont know the answer to your first question, but as far as taxes i think it depends on your tax bracket, how long you owned the stock ect.  I calculated that if i make $10,000 profit on a stock held for 20 days i would have a federal tax liability (assuming, independent, no dependants, and no other income during the year) of 126 dollars. These calculations were based on 2007 tax information.  Honestly, i dont know how they are calculated, but maybe it gives you an idea?

Okay, thanks, that definately helped a bit. What I got from it is basically that if I hold a stock for more than 2 weeks I won't have to pay an arm and a leg when the IRS comes a-knocking.

WhatI would still like to know from some more experience investors how much they payed in taxes after a year worth of weekly pattern and/or momentum trading if they profited, oh let's say $10k...

Any help would again be appreciated.

The lowest federal income tax bracket is 10%.  The highest is 35%.  Long term capital gains are taxed at lower rates, again depending on your overall income level.  The actual rate you pay will depend on which bracket you are in.  A number of other factors can come into play that can cause the actual marginal tax rate for a given amount of income to vary from the stated rate.  Without specifics the question can only be answered in these very general terms.

Support the FairTax and all of these questions disappear. You can keep everything you earn, you don't have to worry about such things.

I am sure that you can find some information on the Internet related to this.  Or try a program like turbo tax.  That is was I used to run the numbers, so i dont have a bad situation come next tax season

Well, 35% as a maximum does sound a tad on the high side :/ also, is that 35% applied directly to the profit as a whole or to just 50% of the profit?

nstojahelidanx:

Does the stock price just plummet or does it "go to 0" so to say...as in "no more stock for you!" ?

 

A company is represented by its stock. You cannot buy the company without buying its stock. When a company is being sold it is actually being sold by its shares. For example, ABC has one million shares outstanding. When they say XYZ buys ABC for 100 million dollars, what they mean is that XYZ will pay $100 per share and buy all the outstanding shares of ABC. Now, if you own the stock of ABC, and it is being bought (say $100 a share), you will receive a tender offer from XYZ to submit your shares (for $100 a piece) by some deadline. You may choose to sell them in the market or go along with XYZ's offer, but once XYZ gains control of ABC it will take ABC's shares out of the market, i.e. ABC will no longer be traded on the market.  

Ouch...that is tough...no wonder why whenever some company is in talks of being bought the stock price just plummets...everyone is selling the stock as fast as they can before the new offer takes place.

Of course XYZ has to hold a majority of the stocks before they decide to take it out right?
What happens if there are still a bunch of people that "forget" to sell their stocks in time...to they automatically go to $0 value or do they automatically get XYZ's buying price?

Also I don't know whether it's good or bad, but I've just been posting like crazy today trying to figure out as many things as I can about the stock market.

Sorry if I'm being a bit annoying with all these posts.

Well, actually it is usually the other way around. When a company wants to take over another company, they usually announce a price with 20-30% bonus. So, that results in surging the price of the stock of the company that is being made an offer with a hope that there will be a better offer. But that was not the case with the Bear Stearns, for it was offered an extremely low price, and hence freaked out the investors.

As for my example, you are right XYZ needs to have the majority, but there are rules that XYZ must compy as well. It must be willing to purchase all the remaining shares with the announced price up to the announced date. As for forgetting to sell, usually the stock goes out of market before the tender offer is due. So your last chance would be to submit to the company for the announced price. If you pass the deadline, your shares are worthless. 

XD I thought so (as to the shares being worthless once the deadline passes). However, yeah I was only using BSC as an example with the plummetting prices. I am seeing the increased offer when XYZ is interested in buying for several companies currently (Borders being one of them). Interesting, thanks for the response.

it was always my understanding that when a company was bought out all that happened was managment changed. For instance if borders bought out barnes and noble Barnes and Noble would still operate they would just be ownd by Borders like a subsidery. Does this ever happen? I am really not sure thats just what i thought.

Me too, that's why I asked. It could be that the buying company XYZ could choose to keep it as a subsidiary or it could altogether assemble it into its own company thus effectively eliminating all the stock related to company ABC.

When a company is bought by another company, the buyer can choose to keep the things as they were running, or completely restructure depending on how healthy business they are buying. One way or the other the company that has been purchased no longer has a stock present in the market.