Buying bankrupt stock, is it a good idea for long term investments?

Usually, after a bankruptcy the old stock becomes worthless, and often the bondholders become new stockholders. Buying the new stock can perhaps make money, but you have to ask if the problems that caused the original bankruptcy are still there. If so, the reorganized company may very well fail again.

Buying the old stock is risky, but sometimes companies declare bankruptcy to get out of union contracts, etc. In these cases the old stock still has value.

In other words, if depends on the situation, but you need to really understand what you are doing to invest wisely here.

Sure. Put everything you own into them. You will make a killing.

Do you want to buy a share of the Brooklyn Bridge?

no way. Stocks of bankrupt companies like Enron won't get you anywhere. If you want to throw away your money, better to give a donation to Salvation Army.

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