Do you remember the story I told last week of a stock getting away from me?
I wrote:
No one took my bid. Some folks did get filled at the price I bid, but there weren’t enough sellers for my bid to get hit. The stock was actually up at one point later in the day, despite gold’s sharp retreat... I will not chase the stock. I’d feel really silly if gold tumbles again tomorrow, putting the stock I want back on sale.
Well, gold didn’t exactly tumble, but it did retreat yesterday, and I got an initial stake in the stock I wanted for three cents less than my original bid. Sweet.
But here’s the thing. Canadian markets, where the stock in question trades, were closed yesterday. So you can imagine my surprise when I got an email from my broker’s automated system telling me that my order was partially filled!
Today, Canadian markets are open. Gold is up and my new stock is up significantly as I type. Instant win.
But if my shares are being bought in Canada and only reported in US symbols, as my broker tells me, how could I have gotten any shares yesterday? I assume my broker’s computer system saw the offer on the US secondary market—the so-called “pink sheets”—and took it.
I’ve asked for clarification.
What I want to stress now is that even if it turns out that a machine bought these shares for me on the US pink sheets, I still do not recommend buying that way.
I understand that the pink sheets can be the only way for Americans who don’t have access to Canadian markets to buy TSX-listed equities. The problem is that pink sheet “listings” are not real listings. Market-makers buy the stocks in Canada and re-sell them in the US. If one ever needs to sell in a hurry, those market makers may not be in a mood to help. When there’s bad news, liquidity can drop to zero.
In short, buying on the pink sheets adds risk and cost to a trade.
That said, I did get my shares, and at an even better price than I’d hoped for before the stock got away from me last week.
My motto, “discipline pays,” has served me well yet again.
