Economist, stock brokers, investors, those capible of thinking with their head not heart please answer?
April 7, 2010 by
Filed under investment opportunities
At what point will Ford and GM shares be worth a gamble?
The gamble being they actually start making electric or hybrid cars more and become lean mean money making machines – and the government bails them out at some point.
I’m mostly a bricks and mortar guy but always look for opportunites….
Now the USA seems more socialist do I look at investments differently there now? I prefer not to invest in the USA for currency reasons but if I could pick up some stock cheap (like penny dreadfuls)……..
Is it likely the government will bail out the car makers to keep the industry alive? Or will it survive without a bail out.
Is there a must buy price? How much more downside has the $us got left in it? Is it (usa car makers) just a black hole investment wise now?
Your thoughts oh financial titans and wizzards of y/a.
Thank you.
I started picking up shares of each at close today. No, don’t look at it differently because you feel that the countries political persuasion has changed. It hasn’t. You are being led to believe it has because it suits socialists in the media that you think so. Nothing could be further from the truth.
Ford and GM are a STEAL at these prices (if they remain in business). What I think will happen is that Ford will go bankrupt and then they will no longer have to pay those outrageous union pension plans. After the bankruptcy they will return a better and more efficient company. However, the risk is that if they do go bankrupt you will not get anything.
I personally do not think they will go under because GM is one of the 30 companies on the DOW. It is a HUGE symbol (pride, if you will) for our country. If the government does not bail them out they will find a way to may it work.
Note – I bought 500 shares of Ford at $8 and then bought 2,500 more today at just above $2.00.
GM had negative cash flow from operations two out of the last three years. AND, last year it was only positive because of one time accounting adjustments.
Any time you invest in a firm that has negative cash flow from operations you are pulling the lever on a slot machine. I know the price per share makes the company look cheap especially when considering the storied histories of these two companies. But the pension obligations alone for both of these auto makers make me feel like investing is just rolling the dice.
High risk = High reward. So it’s up to you. I know a lot of people who took the plunge on a “cheap” WAMU stock and took it on the chin. Different sector, I know, but gambling is gambling.
with any investment you have to look at the fundamentals. have any of these companies shown any improvement in their situation? do they seem to have a coherent plan to survive the crisis they are in? does the external market look good for the products they make?
car sales have fallen off a cliff in recent months. oil has a solid fundamental base to exceed it’s all time high in the next two years and these companies have shown no real plan to deal with this. the market is changing daily and they are oblivious to it. the management of these firms is poor and needs a serious reality check. from a fundamental view i would not touch them.
This is basically a gamble, not an investment. Your profit to loss ratio is attractive, but it’s basically all or nothing. You’ll either win big or lose it all. And you can’t tell by looking at the numbers which one it’s going to be. If you’ve got some mad money to play with, it might be worth the gamble. You might get a chance to get out with a profit somewhere along the way.