THE MOTLEY FOOL

Acquisition Issues

Q. When a company is bought by another company, does its stock price always go up? – P.Y., Carson City, Nevada

A. Not necessarily. Imagine that the acquiree has a stock price of $50 and a market value of $5 billion. If it’s announced that it’s being purchased for, say, $6 billion (equivalent to $60 per share), the stock price will generally rise to around $60 on the news. It’s common for a company to be bought for more than its market value, perhaps because the purchaser sees value in factors such as its proprietary technology, patents or growth potential. It might also be bought at a premium due to a bidding war. Other times, a company may be struggling, and it may end up being bought at close to its current market price. The acquirer’s stock price might jump, too, if investors see the purchase as strategically smart. If investors think the company is overpaying, its stock might sink a bit.

Q. How can I track my portfolio online? – C.A., Hickory, North Carolina

A. Your brokerage will probably offer portfolio tracking. Otherwise, many sites, such as Finance.yahoo.com, do so. You might click something like a “create portfolio” link, then enter the various stocks and funds you own and the prices at which you bought them. After that, you can click in any time to see the latest value of each holding, as well as your overall portfolio’s value. To help you keep up with stocks on your watch list, you might create a separate portfolio for those as well.

FOOL’S SCHOOL

15-Year or 30-Year, Fixed or Adjustable?

Here’s a look at the pros and cons of different kinds of mortgages.

A 30-year mortgage suits many homebuyers because it generally offers lower monthly payments – and it can be easier to qualify for, too. Lower payments can help buyers buy a better house, and/or they can leave more money in the household budget for saving, investing, emergencies and other needs. But such a long loan means that you’ll be paying a lot more interest over the life of the loan than you would with a shorter-term one. You’re likely to have a higher interest rate, too, and you’ll build equity in your home more slowly.

A 15-year mortgage will likely offer a somewhat lower interest rate, but your monthly payments will be higher. You’ll build equity in your home faster, you’ll pay much less in overall interest, and you’ll pay off your loan in half the time. Still, if you’re tempted to go with a 15year loan, consider taking on a 30-year one and making extra payments regularly.

Next, consider whether you should get a fixed-rate or adjustable-rate mortgage (ARM). When interest rates are low, fixed-rate loans – which make it easy to budget – are compelling. When rates are on the high side, consider an ARM; it will give you a relatively low starter rate for a few years, after which your payments will ratchet up or down per prevailing interest rates. An ARM can burn you if rates keep rising for a long time, but it can be a smart choice if you don’t plan to stay in the home for decades.

Weigh your options carefully before getting a mortgage. Learn more at Consumerfinance.gov.

MY DUMBEST INVESTMENT Settled for Less

My worst investing move happened more than 15 years ago. I had 200 shares of Apple that I’d bought at a split-adjusted price of about $2 each. I sold them all for a gain of around $1,000 and was very happy. I then bought shares of a healthcare company with the proceeds. In a year or two, I lost all my money when that company went bankrupt. Whenever I look at Apple stock now, I feel the pain. – B., online

The Fool responds: Apple has been such a phenomenal stock that it’s the source of myriad investors’ regrets. It has averaged annual gains of more than 31% over the past 25 years – enough to turn a $1,000 investment into nearly $980,000! For context, the S&P 500’s average annual gain during that period is 6.6% or 7.7%, depending on whether you reinvested your dividends in more shares.

FOOLISH TRIVIA Name That Company

I trace my roots back to 1980, when Houston’s Coastal Corp. created me by spinning off its natural-gas pipeline subsidiary. I shifted my focus to refineries in the late 1990s. In 2013, I spun off CST Brands, my network of nearly 1,900 convenience stores. Today, with a market value recently near $51 billion and 15 petroleum refineries in the U.S., Canada and the U.K., I’m the largest global independent petroleum refiner. I’m one of North America’s top renewable fuel producers, too, with 12 ethanol plants. My moniker comes from the Alamo’s original name. Who am I?

Last Week’s Trivia Answer

I trace my roots back to a familyowned wig store in El Paso, Texas, in 1968. My U.S. business is based there, but I now have a headquarters in Bermuda, too. With a recent market value near $2.6 billion, I’m now a major consumer products company, with many familiar brands under my roof, such as Braun, Drybar, Hot Tools, Hydro Flask, Osprey, Oxo, Pur and Vicks. I rake in more than $2 billion annually and employ more than 2,000 people worldwide. My namesake, the beautiful wife of Sparta’s King Menelaus, was blamed for starting the Trojan War. Who am I? (Answer: Helen of Troy)