Thanks in part to the coronavirus, more than 500 companies have filed for bankruptcy this year. The biggest by far is Hertz (NYSE: HTZ), which sought Chapter 11 protection in May with $25.8 billion in assets and $24.4 billion in liabilities. Some companies restructure and survive bankruptcy. Many do not. The ones that don't generally go into liquidation. In a liquidation, shareholders don't receive a dime until bondholders, creditors and other lien holders are paid in full. Click here to watch Alexander Green's latest video update. In other words, they usually get nada. So sophisticated short-term traders generally avoid bankrupt companies. Yet in the last month, traders have flocked to Hertz. From a low of $0.40 on May 26, they bid it all the way up to $6.25 on June 8. That's a great return for someone who got in a month ago and sold a couple weeks later. Of course, going to a casino and putting all your money on a number at the roulette wheel can pay a great return too. But I don't recommend it. As I write, Hertz has succumbed to gravity and reality. The stock is back near a dollar. What were those traders thinking? The evidence suggests they were not. Many low-priced stocks are being manipulated by hordes of inexperienced day traders, most of them millennials and Gen Xers. Stuck at home during the pandemic with no professional sports to bet on, they have turned to the stock market. Instead of riches, most will receive an education that makes the Ivy League look cheap. Jaime Rogozinski, founder of WallStreetBets, heads such a group with approximately 1.3 million members. And he has no illusions about their investment prowess. "They don't know what they're doing. And they don't care that they don't know what they're doing," he says. "To them, there's no sense in looking at a company's balance sheet or figuring out how to do a discounted cash-flow analysis. They just regard the volatility as an opportunity for fun." Hoo-boy. The sad part is these traders' instincts are basically correct. Low-priced stocks do offer the biggest potential returns. (Although you won't earn them flipping shares every few hours... or minutes.) Run your finger down the list of the best-performing stocks each year and you'll find that the vast majority of them - if not all of them - are microcaps. | 
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