should we buy AMR stock now?

There's definitely no gamble to it. You invest now and you'll lose all your money, plain and simple.

The company that comes out of a bankruptcy is not the same company that you'd be invested in. Shareholders are the last of the creditors and all creditors will be paid partially or wiped out, in the case of shareholders, it's wiped out. What comes out is a new company whose equity may have been given to some of the creditors ahead of the shareholders but never to the shareholders unless all other creditors have been paid in full, not partially paid but paid in full.

If you must invest in a distressed company, you buy their convertible bonds. The judge may convert them into shares of the new company according to the stated conversion. That doesn't mean you get your money's worth but you get a chance.

The previous posters (EDIT: and Eddie W who is a later poster) are all clueless idiots.

AMR has filed for Chapter 11 bankruptcy protection. In a Chapter 11 bankruptcy, the common stock is almost always cancelled. The only time when it is not cancelled is when all the debt - including the most subordinated, junior, unsecured piece of crap in the whole capital structure - is paid off. AMR unsecured debt is currently selling at 15 cents on the dollar. That means that the market thinks that the debt will recover only 15 cents per dollar not $1 on the $1 or anywhere close.

That means that the debt holders will become the new equity holders and the old equity holders will have their stock cancelled.

I wish these bankrupt stocks didn't trade. Every time a high-profile company goes bankrupt, there are all these people on YA who don't understand bankruptcy and go buy the stock. It happened with GM, Blockbuster, now AMR. When the judge cancels the stock or the SEC suspends trading in it, all these people will come complain on YA about how terrible it is that they lost their money.

So - no - investing in AMR is not even a gamble - it is a certain way of losing your money. You would be much better advised to take your money and buy Lotto tickets with it.

Edit: John W keeps posting this nonsense "If you must invest in a distressed company, you buy their convertible bonds. The judge may convert them into shares of the new company according to the stated conversion.". The convertible bonds are almost always among the most junior bonds in the capital structure. In this case, the converts represent a pretty large group as there are $460M worth of 6.5% 2014 converts. If you bought these, you wouldn't be buying it to get new stock (that's the booby prize) - you would be buying them to fight for recovery as the lowest guy on the totem pole who has a chance. That's not the kind of game that amateurs should play.

I won't exactly say you are gambling, but I would say your eyes are much bigger than your brain. You know the company is dying and you are investing in it hoping that it would resurrect.

If you have a little surplus money, it really won't hurt if you buy 1,000 shares. It only costs $380. If you lose it all, the most is not to go to movies and McDonald's for 6 months. Why not? But if you are thinking of putting heavy on it, don't.

I will never understand the fascination traders have for puting money into bankrupt company stocks.

Would you invest in the future of someone, you don't know...Who could not make a business successful?? I doubt that very much.

Poor companies don't magically become successful by declaring bankruptcy. Search for good companies with solid returns and trends....don't invest in bad companies in struggling industries...that in not the road to riches.

This a super pld post. I bought some of this stock on short sell plan and made $800 in a week. So a big raspberry to all the naysayers. Sometimes you risk it and it works out.

no way! that stock has been in a steady downtrend for the last several years and shows no sign of changing that direction.

It is always risky at best to buy a stock below $1 as stocks like that are usually in danger of getting delisted (removed) from the market.

The stock also took a big dip 11/28/2011. i would avoid this like the plague as there are a lot of better opportunities out there.

I would categorize it as a gamble. Remember, when bankruptcy occurs, the first in line to take it up the a*s are the common equity holders. There are many options with just as much upside potential and not the downside.

I see no reason for it to go up, look at its 5 year.

http://www.google.com/finance?q=amr

This is a very good stock, look at its 1yr, 5yr & 10yr

http://www.google.com/finance?q=NASDAQ:QCOR

Nobody should start investing in stocks without first paper trading for about 6 months to get the feel of how and when they move.

no.

Bankruptcies are no place for an amateur.

Airlines are no place for anyone who wants to be rich. Or stay that way.

Never throw money into stock market or casinos. It's just a gamble.

Save your money. Or buy gold with it.