Could someone explain, in layman's terms, how the hell this can happen? How can a company that is obviously in quite a pickle be a good thing for investors?
Buy low, sell high, no past, no future. Let's say Amgen is 170 bucks a share. You buy 100 shares. Your investment is $17,000. Let's say Seeking Alpha publishes that "buy Amgen" article. Amgen is now $178 a share. (go check! Ticker is AMGN). Your investment is now worth $17,800. If you bought Amgen last night and sold it right now, at $8 per trade on eTrade, you just made $792. So that's one way. Let's also say that Amgen, as a company, is defunct. Amgen, as a slu of patents, is a valuable portfolio. Whoever buys the company will get their patents and "trim the fat" (IE, everyone who works at amgen). The owner of those patents gets all the profit and none of the overhead. So if you hold Amgen stock and Amgen is bought by a corporate raider intent on dismantling it, everyone is going to want some of that Amgen stock so that they get bought out. So that's another. Now - if you work at Amgen you get upside on the first and all downside on the second. But who gives a fuck about the people who actually make things? The market is all about the people who buy and sell the companies that make things.