So i have a few questions about trading equities...
i recently purchased an equity after they filed for bankruptcy, as I had strong mind they would recover. So far, they are proving just as i expected, but then i read some interesting information about stocks in general (not specific to this one i own):
1. If you buy pink sheets (or stocks of companys under bankruptcy) they will be considered "common stock".
2. If the company emerges from bankruptcy, there will be a new stock code issued, and the old "common stock" will become worthless.
Is this true?
If so, does that mean i should sell before they finally emerge and create the new stock?
My assumption was that i can invest the equities during bankruptcy, and if they emerge i would continue to earn on the same right. otherwise...why would i invest in a "pink sheet" if it is always going to become worthless if the company does well? seems odd that investing in struggling companies would prove to be fruitless for investors if the company succeeds.