Mergers, acquisitions and spin-offs are part of the corporate restructuring strategy in which big and small companies indulge in today’s corporate world. These are also called consolidation activities. Companies pursue consolidation activities to strengthen their strategic and competitive positioning.
Merger happens when a new company is formed by the combination of two separate legal entities. The stocks of both of the companies are surrendered and a new company issues fresh shares in the market. An acquisition is a purchase of one company by another where the target company ceases to exist and the acquiring company holds the stock of the target company.
In today’s world, top managers try to name an acquisition also as a merger, because it gives a negative impression in the minds of the stockholders that their company has been acquired. An equal merger is very seldom seen and most of the times it is an acquisition given the name of a merger. A merger can be both hostile as well as friendly.
A spin off is a divestiture wherein a new company is formed by selling or distributing the shares of an existing company. Companies pursue spin-off in order to streamline their main businesses. Then the companies sell their businesses, which have lower productivity.
Impact of Mergers and Acquisitions on the Shareholders and Employees
Mergers and acquisitions are not always welcomed by the members of the company whether it is the shareholders or the employees. The reason for this is that a merger normally leads to more job cuts and reduction of workforce. Job cuts are what the employees are afraid of and something that is inevitable. As far as the shareholders are concerned, mergers and acquisitions can lead to creation of large and small groups of shareholders. The minority shareholders are always at a risk of losing their interest to the larger groups. However through mergers and acquisitions the companies can achieve economies of scale and an improved infrastructure for the staff.
Causes of Failure of Mergers and Acquisitions
Most companies have increased productivity after a merger or an acquisition. But things might not work that effectively if the corporate cultures are very different. Reduced efficiency and shrinking productivity can hamper the success of the new company if the employees do not enjoy the same privileges they used to have in the target company. These are some aspects, which are ignored by the top management while entering into a contract, but later on they realize the mistake. Due to these flaws the day-to-day business is hampered to the extent that the company may suffer huge losses in a short span of time. Experts suggest that the board of directors needs to be more realistic while making a deal so that the future integration is for the betterment of one and all. The value of the company, which is pursuing an acquisition or merger, would decline, as a result of the integration risks and cash exhaustion associated with the transaction.
Available Software
Several software packages are available in the market to help companies create documents associated with these transactions. Since the approval of the Stock Exchange Commission (SEC) is required to complete the transaction, a lot of documentation work has to be done. This software helps companies to reduce their paper work.
David Gass is President of Business Credit Services, Inc. His company publishes afree weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com
A proxy is an agent legally authorized to act on behalf of someone else. When shareholders are unable to attend corporate meetings they can still cast their votes by using a proxy, who votes on their behalf. In order to do this the proxy needs to produce a power of attorney document.
Generally the company sends a letter to shareholders, prior to any meeting. This letter contains several documents providing information about the company’s growth, performance, its management, information about changes in the share structure, notices about any mergers or acquisitions and anything else pertaining to the functioning of the company, which may interest the shareholders. In short this letter would contain all the matters that shareholders might vote on during the meeting. Along with these documents, there is a form, which allows shareholders to vote by a proxy if they cannot attend the meetings in person.
Importance of Proxy Voting
Shareholders must carefully study all the documents provided and cast their votes. This is the primary method by which a shareholder can influence a company’s operations, its corporate governance, and other important issues. Therefore voting and making their decisions clear is very essential for a shareholder. Hence, when voting in person is not possible, proxy voting becomes essential for a shareholder. Usually a shareholder has the right to cast one vote per share he owns, so it is important that the shareholder casts his vote at least by a proxy. Proxy voting enables a shareholder to own shares of companies registered all over the world and influence every one of those companies’ decisions.
The Role of Institutional Investors
Thanks to the Internet, several large institutional investors can post their decisions online explaining their stance and making small time investors aware of why they have made their choice. They use proxy voting guidelines, helping proxy voters to know their views about the matters to be decided on at the meeting. These institutional investors can urge the company to alter or at times even withdraw some of the proposals making the institutional investors’ proxy voting guidelines fairly important.
Proxy Voting - Service Providers
The Internet has made it very easy for shareholders to cast their proxy votes online. Proxy service providers, such as EquiServe, Automatic Data Processing and other such companies deliver the documents in an automated electronic format and the shareholders merely have to fill out the form and cast their votes. They log in using a personal number or a code number assigned to them and cast a vote for or against the corporate resolution proposed.
Nominating Board of Directors
Companies also allow shareholders to nominate members to the board of directors. It is a refreshing change to get to nominate directors, for the shareholders can elect an appropriate person who will guide the company to better, above-average growth and ensure good corporate governance in the company. However the wrong choice can lead to someone with no experience or direction causing a lot of harm to the company. Shareholders can vote on such matters as election of directors and auditors as well as the choice of acquisitions and mergers.
The Role of Internet
Owing to the excellent choice of software available to enable the process of proxy voting it is simple and easy for a shareholder, within a matter of a few minutes, to cast his vote by a proxy through the Internet or by a simple phone call. The Internet has made it possible for an investor to own shares of companies across the globe and cast votes for every one of them in a fairly simple manner, allowing the investor to influence the companies’ decisions regarding corporate governance and other important issues.
David Gass is President of Business Credit Services, Inc. His company publishes afree weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com
Choosing a stock while making an investment decision depends upon your financial goals. Corporations issue different types of stocks, the basic two types being common stock and preferred stock. Another type of classification, commonly used is to classify stocks as growth, value, or blue chip stocks, amongst others. It is important to understand the various terms clearly so that you can make a wise investment decision.
Common Stock
This is the basic stock issued by a corporation and represents the fraction of the company owned by you. Common stockholders bear the most risks associated with the company. Common stockholders get dividends only after preferred stockholders get theirs. However, the investors holding common stocks have voting rights in the company, which enable them to influence corporate resolutions. Preferred stock holders do not have voting rights.
Preferred Stock
This is a form of equity, but has the characteristics of both bonds and common stock. As the name implies, preferred stock holders can claim the earnings and also the assets in the event of liquidation of the company, prior to common stock holders. However, the claims of preferred stock holders come after those of bondholders.
Additional Classifications
1 Growth Stocks: Growth stocks are stocks of companies whose financial performance and earnings exceed the industry average and the economy in general. The profits are typically re-invested to expand the business and minimal dividends if any, are paid to stockholders. Stockholders gain because the share price goes up as the company grows.
2 Value Stocks: These are stocks considered undervalued by investors. Typically, these may be stocks of companies going through a rough patch or whose growth potential has been underestimated by the market. These stocks attract those investors, who believe in the long-term growth of the company.
3 Blue Chip Stocks: Blue Chip stocks are stocks of financially sound, well- established companies with well-established management and track record of delivering earnings. Their stock price movements are less volatile and they pay regular dividends. Such companies have industry leadership.
4 Defensive Stocks: These stocks provide stability in stock price during periods of recession, economic slowdowns or slow down in industries. Consumers continue to buy food, medicines, gas and electricity even during slowdowns and stocks of companies dealing with these sorts of goods do not lose much value during rough patches in the economy
.
5 Cyclical Stocks: Cyclical stocks are stocks of companies, whose performance increases and decreases along with business cycles. When the business cycle is in an upturn, the value of the stocks of companies related to the particular industry would appreciate rapidly, offering windfall gains. Commodities, airlines, durable goods manufacturers fall in this category. However, these stocks lose value during downturn in business cycles.
6 Income Stocks: These are especially suited for investors looking for a greater proportion of current income of companies. Income stocks offer a higher dividend in relation to their market price. Blue-chip companies and utilities like banks fall in this category.
7 Seasonal Stocks: Stocks of such companies fluctuate with seasons. Examples are stocks of retail companies and greeting card companies, which have a greater proportion of sales during festive seasons.
8 Penny Stocks: These are low value stocks, typically with a value in the range of $1 to $5 per share and are traded Over-The-Counter (OTC). They are highly speculative and high risk investments.
Additional Help
A thorough understanding of different types of stocks and the characteristics of each is essential to make informed decisions, and preserve or witness appreciation in the value of your investments. Modern software makes it easier to manage your stocks in various companies.
David Gass is President of Business Credit Services, Inc. His company publishes afree weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com
Dividends are a portion of the company’s earnings to be distributed to its shareholders, based on the board of directors’ decision. Dividends are quoted as Dividend Per Share (DPS) or dividend yield. Most companies having stable and secure growth offer dividends when their share prices become stagnant. However several companies do not offer dividends since all their profits are reinvested to ensure faster, better-than-average growth. The board of directors decides the percentage of the profit to be distributed as dividends. Dividends are issued quarterly or annually, and companies are not under any obligation to pay dividends every quarter and the company may stop paying dividends at any point in time. But if the company stops paying dividends its market value is affected. Hence a reason why dividends are usually paid regularly and even if there is no increase in the dividend at least they will get dividends on a fairly regular basis. The board of directors declare dividends each time they are paid. There are three important dividend-related dates: declaration date, date of record and payment date. On the declaration date the company opens a book of liabilities in terms of the cash dividends it owes to the shareholders, and on this date both the other dates are decided and declared. Date of record indicates the dividends paid only to shareholders who are the owners of the share on or before the date of record. Payment date is the date the dividend is paid out.
Types Of Dividends
Companies offer three regular kinds of dividends as well as special forms of dividends
1.Cash Dividends:
This is the most common and popular method of sharing a company’s profits. The company pays portion of profits to shareholders as dollar per share. However cash dividends are subject to double taxation in the US. This is a reason used by many companies to justify not paying dividends. The government taxes at a maximum rate of 15%. The company distributes dividends after the company has paid income tax and the government taxes the shareholders once they receive the dividends.
2.Stock Dividends:
Companies pay stock dividends in the form of additional shares of the same company or its subsidiary corporation according to the proportion of the shares owned.
3.Property Dividends:
Companies pay property dividends in the form of products or services provided by the corporation. These take the form of assets such as gold, silver, cocoa beans etc. distributed by companies.
4.Special Dividends:
Companies offer special dividends rarely, such as when the company wins litigation and when the company sells a business or liquidation of investments. Some companies also offer special dividends when they have high amount of excess cash, in order to boost the market value of their stocks. Sometimes they document these special dividends as return of capital, meaning the company is returning a portion of the money invested by the shareholders. They call these dividends capital dividends, and these dividends are tax-free.
Reinvested Dividends
Shareholders can reinvest dividends received partially or totally in the company’s stock if the shareholder does not depend on the dividends to make ends meet. Shareholders accumulate wealth consistently this way and enrolling in a dividend reinvestment plan can make the whole process of reinvesting easier since everything is automated, thanks to the various types of software that have commendable features, making everything concerned with dividends just a mouse click away. From the convenience of your home you can find out the latest statistics about dividends and reinvestment options.
David Gass is President of Business Credit Services, Inc. His company publishes afree weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com
Insider trading is the trading of a company’s shares by people who work for the company, such as senior level executives, directors and those who own more than 10% of the total shares. Insider trading is illegal since the trading is based on some privileged information that the insider has access to, but is not known to the public at large. The act of misappropriating some privileged information, or violating duty and trading or relaying information illegally is illegal in the United States. The office bearer has made a contract to serve the shareholders and to protect the interest of the shareholders so the office bearer violates their duties if the office bearer trades based on company owned privileged information for their own gain. The United States has had laws against insider trading going as far back as 1909. At this time the law declared if a company’s director bought his company’s shares because he knew its value was about to increase suddenly, it was fraud.
Not just senior level executives are capable of insider trading. Anyone in the company with privileged information is capable of insider trading. For instance, if an employee of company 1 learnt about the takeover of company 2 by company 1 and buys the shares of company 2 it is illegal insider trading, since that employee is violating the interests of the shareholders of company 1. According to US federal laws, companies have to specify a certain period when their staff can safely trade stocks without being accused of illegal insider trading.
Penalties for Insider Trading
Penalties for insider trading include a fee of three times the profit incurred or the loss caused to the company by insider trading. The insider may be banned from being a company executive or removed from the board of directors. The culprit may even have to face a jail term. The SEC (Stock Exchange Commission) offers rewards as bounty to those who help apprehend insiders who practice illegal insider trading.
Laws must be enforced to protect the investors, to ensure a fair, efficient market that is transparent and ethical, and to reduce systemic risk. Laws are needed to control insider trading, trading ahead of the shareholders, and to avoid misuse of client’s assets. These principles are the core principles issued by the International Organization of Securities Commissions and more than 85% of the world’s security and comodities regulators have agreed to follow these principles.
Legal Insider Trading
Insider trading can be legal when a company’s insider does not break any law and trades his shares in a normal mannerm reporting it to the SEC. However, some groups oppose the notion of any insider trading being illegal. They argue that trading by insiders is allowed in real estate sectors so it should be legalized in other sectors as well. They don’t think the securities market should be treated any differently. They believe insider trading makes the stock market more efficient.
Effects Of Insider Trading On Shareholders
When insider trading occurs repeatedly, the common shareholders end up losing money, whereas the insider pockets a sizeable profit cheating the company and the trust the shareholders have placed in the corporation. Despite the laws and the penalities, insider trading continues and most often the perpetrators of this illegal act are left unapprehended due to lack of proper evidence. This has a negative effect on shareholders in general.
David Gass is President of Business Credit Services, Inc. His company publishes afree weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com
An initial public offering (IPO) is the initial sale of the common shares of a company or corporation to public investors. A corporation issues an IPO to raise capital. IPOs come with a host of compliance regulations and other legal requirements. The term IPO refers to only the first public issuance of a company’s shares. Any further public issuance of shares is a Secondary Market Offering. The company offering its shares, known as the issuer, enters into a contract with the underwriters to sell its shares to the general public. The underwriters approach investors with offers to sell these shares. The IPO is a risky investment. As an individual investor, in the absence of historical data, it is difficult to predict the market’s response. Since most IPOs are of companies, which are going through a period of transitory growth, the future value of the stock tends to be uncertain.
Features of IPO
Like other financial assets being traded in markets, stocks also follow the principle of supply and demand. Many analysts obtain expertise in evaluating stocks. If the analysts consider the equity to be undervalued, they recommend buying the stock. They recommend selling the stock of a particular company, once the share price passes the fair value or target price. IPOs are unique stocks since they are newly introduced/issued stocks. The purchase of oversubscribed IPOs are the best bet as they usually appreciate considerably, since there is a great demand for these stocks.
Evaluation of the IPO
Generally analysts consider the following points while evaluating the new issue.
1 The reason behind the company’s decision to go public.
2 The company’s plan for investing the money raised through IPO.
3 The growth prospects of the particular sector or industry in which the company associated.
4 The growth prospects of the company in its own domain.
5 The vision of the company.
6 The career graphs of the people in the top management of the company.
The above information could be retrieved from the Form S-1 that is filed by the company before filing for the IPO.
Pricing of the IPO
Pricing is the most important feature of stocks, and it holds all the more importance in the case of the IPO. There is a marked difference between the prices of IPOs and their own pricing while dealing in the secondary market. This disparity in pricing can be credited to whether there is general acceptance among the investors. The IPOs, which appeal more to the investors, start with an initially high price. The increasing demand for these stocks can only be satisfied after the introduction of trading. This results in high prices for the shares in the morning hours of trading and falls or steadies as the initial rush for trading subsides.
Unforeseen Circumstances
The IPOs generally operate as discussed above, but at times there are some conditions for the issuer such as having a minimum balance in the account of the prospective buyer, a subscription to their premium services, or restrictions on the flipping of the shares.
David Gass is President of Business Credit Services, Inc. His company publishes afree weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com
Recruitment is one important ingredient in creating a successful business. It is better to have committed and responsible individuals to include in a particular group. It is will be easy to finish a goal. In any meeting or business appointments that you facilitate, you have to recruit new people that can help you in giving references like flyers and information sheets. These tools are effective ways in recruiting the right individuals for their specific specialization or expertise. It also involves self-sacrifice to recognize the participation of your new members and your own involvement.
Make a connection on how you can have information to know if you have similarities, like the same neighborhood or same school, which you attended. A personal connectivity between you and the person in that relative aspect of recruiting makes you the person much better. You must at least give an idea of the history of the company or group your recruit wants to join. It is very important for that individual to know what he feels in regards to his recruitment.
Give the exact issues you want to point out to the person. It is better to tell them what you need from them, if they can contribute their support and loyalty to you. They will have to understand their tasks and know what you are expecting from them. It could be helpful to advice them to give their commitment to you. You need to make them feel that you are willing to entrust a task or and you are willing to help them in accomplishing the work even without much supervision. Encourage your recruits to inform you in advance if they cannot do the tasks or the possibility of doing it because of pressures or other concerning matters.
In recruiting, there must be a certain agreement that needs to be established. You must lay down the conditions and issues regarding their work. Tell them the steps and instructions they need to follow. In this way, they will be able to execute accurately the work that is assigned to them.
Be sure that the persons you are recruiting are screened correctly. You must know their capabilities and skills. It is an advantage that you have at least an insight to the whole personality of the person. Many instances have happened that recruits tend to make false information regarding their application. Make sure you have that deep knowledge on their personalities and performance in their previous companies or groups where they belonged.
Develop a message that you are endorsing benefits like pensions, housing, retirement plans and health benefits. They should know that you are promoting human rights and equality to employees. Show them that their future will be better and they need not worry about their security concerning their positions as new members.
You should be aware that you must distribute tasks and involve them to responsibilities where they can learn and grow as a person. As a leader, you must understand that you need to involve them in various activities and let them help you address the information you want to point out to others. Do not be self-centered and share your ideas and inputs. This may give them the impression that you also want them to progress.
To make sure that you get the right persons that you want, you can use two methods in recruiting. First is the principle of wholesale recruitment. In this method, you gather a number of persons who are interested in joining your particular group, individuals who are aspiring to get a position and being a member. The idea of this method is to get a wider view on those applicants. This strategy lets you give the information to many people. If possible, use only few people to gather and get the names of the aspiring to be members.
On the other hand, retail recruitment involves the direct contact with the person. This is the main procedure you do in this method. The idea of identifying someone who is interested by directly addressing to the person the issues and concern they want to know. Choose the person that is most qualified and dedicated to really joining the group. You can talk to the person on the phone for confirmation and information why they want to get into your group. Gathering the best information on who you want to get is the very important thing in signing up your recruit. You can work harmoniously and finish any task with full trust and loyalty to one another.
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A Shareholder Meeting is presided over by the Chairman. The Chairman has the responsibility of coordinating the meeting unless the Chairman assigns this responsibility to someone else. Below is a list of formalities that must be followed at a shareholder meeting.
1. Participants’ List: Preparing a comprehensive list of the participants of the meeting is the first step in conducting a shareholder meeting. All the participants should be carefully noted to avoid any discrepancy.
2. Proper Notice: A proper notification, well in advance, should be issued to all the participants about the venue, timing, and substance of the meeting. Ideally the shareholders give courtesy calls confirming their intent to be present at the meeting.
3. Agenda: A clear agenda should be formulated and circulated among the organizers and the participants, giving them a brief and fair idea as to what is expected at the meeting.
4. Reference Material: Any reference material regarding the meeting should be kept close at hand. This includes documents such as the company’s charter, figures, and reports of importance to the agenda of the meeting.
The Importance of Shareholder Meetings:
Below is a list of some of the decisions that come under the umbrella of Shareholders and which can’t be decided without their consent.
1. The decisions pertaining to the classes of shares and the rate of annual dividends for the respective classes of shares.
2. The decisions related to any change in the management or the board of directors such as addition or termination of its members.
3. Everything related to the company’s image in the market and any damage to it.
4. The decisions regarding the acquisition of another company.
5. The decisions related to the dissolution of the company.
6. The approval of annual financial statements.
Essentials of Shareholder Meetings:
There needs to be a specific number of participants for a meeting to be conducted. This is known as Quorum. Generally, the assembled shareholders should qualify for more than 51% of the company’s shares. Otherwise the status of the meeting remains unofficial and is devoid of the power to implement any decision or pass any resolution. Hence the coordinator meeting should adhere strictly to the notion of the Quorum to make the decisions of the meeting worthwhile. Although it is generally required to have a majority of little more than 50% of votes to preside over any resolution, there are some aspects and subjects in a company’s charter where, according to law it is required to gather more than 65% votes to pass a particular resolution. Below is a list of such subjects.
1. Decisions on the classification of shares and the number of shares to be offered to the particular class.
2. Introduction of any change in the company’s charter.
3. Dissolution of the organization.
Additional Help
There are provisions for virtual shareholder meetings wherein physical presence can be replaced by interaction from a distance. There is also software available in the market to assist corporations in streamlining their efforts to conduct a smooth shareholder meeting. This software assists in documenting the meeting and provides other considerable assistance to minimize human errors and efforts.
David Gass is President of Business Credit Services, Inc. His company publishes a free weekly e-newsletter on Small Business Consulting at their
web site http://www.smallbusinessconsulting.com
Large companies and institutions employ teams of analysts to help invest in other companies. If they buy a particular stock, the market often expects the stock to have significant upside potential. And if they are selling the same stock, it could mean that the company, whose shares are being sold, is witnessing some difficulties.
The investment trends of the Institutional Investors can be traced online. The following information is online.
1. Institutional ownership of shares in a particular company and its percentage.
2. Number of shares in the company
3. Transactions over the last three months.
4. Details of buyers and sellers.
Trends:
It can be misleading to blindly follow the trends of Institutional Investors, since theit priorities and the priorities of individual investors often differ. These large firms must meet performance goals, which compel them to trade more frequently than individual investors. Analysts and equity researchers dig deep into the history of the companies and usually recommend buying undervalued shares for long-term prospects. With the possession of more shares, these firms play a major role in the decision-making processes of companies, which leads to better management and higher stock valuation.
Risks:
Even with a team of analysts working on investment patterns, this is a risky business. The concentration of investments in a particular domain spells danger as any fluctuation in the stock market or the subsequent impact on a particular domain may spell large losses. Institutional Investors are accountable to the individual investors, who have pooled their money into the institution. At times the pressure of this obligation triggers them to invest in a particular sector with significant risks. The lure of getting huge returns within a small time frame causes some of them to invest heavily in high-risk sectors. There is also the risk of investing in companies, which are at the peak of their lifecycle. These companies can either show a slow increase in the value of their stocks or a downslide. Investors generally commit these mistakes when the focus of the investors is only on the price fluctuation of the stocks.
The activities of institutional investors can be traced by closely monitoring trading, since they usually deal in block trades, in the line of $100,000 or above. Possessing investments from some of these firms is considered a safe bet, but the valuation of those stocks may be high. This is the reason why they are always on a lookout for a growing company, which has significant future growth prospects overlooked by other major investors. When institutional investors reduce their position in a stock, the value of that particular stock may fall significantly.
David Gass is President of Business Credit Services, Inc. His company publishes a free weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com
After Hours Trading or AHT is the trading of securities on big exchanges after the normal trading time is over. After hours trading, which used to be the privilege of institutional investors is now available for every one. The advent of electronic communication networks or ECN has brought radical changes in the method of stock trading. ECN is a medium that has made buying and selling stocks as easy as the click of the mouse. Moreover, big institutional investors have the advantage of trading without the need to disclose their actions.
Risks Involved With AHT
The advent of after hours trading makes it possible for investors to earn big profits. However, there are several risks and dangers involved with this kind of trading. The biggest drawback of after hours trading is that the number of traders is far less than regular hours. Sometimes this may make cashing in on your shares more difficult, because of low volumes. Another risk involved with low volumes is wide spreads. That means a big difference between the asking price and the bidding price, which makes getting a favorable price more difficult.
Another risk factor associated with after hours trading is volatility. Because the trading is very thin, harsh fluctuations in the prices may make life very difficult for the investors.
Benefits of After Hour Trading
Whenever, you come to know something that may affect the prices, you have the convenience of making deals immediately. Moreover, you can gain from the volatility by intelligent trading and trading at an attractive price.
ECNs have realized the problem of low volume. Several major ECNs are joining hands and agree to share the ask price and bid prices. This is an effective step to attract large investors and to increase the liquidity. Most analysts agree that after hours trading is in its early phase and facing minor growth problems. Level of liquidity and the fragmentation are two major issues that need to be tackled for the growth of after hours trading.
After hours trading makes buying and selling stocks more convenient for international investors. Often international investors operate at different times than the ordinary American stock markets.
The final price of a stock in after hours trading is important. It is an indication to the traders of how it is going to behave when the market opens the next day.
After hours trading is only for the most experienced investors and even then it should be done with the utmost caution. It is one of the riskiest ways to invest in the market. However, some consider the profits to be worth the risks. After hours is often a good time to obtain good prices on stocks.
David Gass is President of Business Credit Services, Inc. His company publishes afree weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com