What automotive stocks would YOU invest in?

GM, VW, Toyota, Packard, Biofuels, etc. etc.
Buy Buy Buy OR Bye Bye Bye?

I own a few hundred shares in Ford. I'm sitting and waiting until Jan 2009 to see how bad it really is to invest some more money... most likely GM and more Ford.

I am and a total newb in the market so I appreciate any advice. But it seems Ford and GM are here to stay and their stocks will eventually go up....right? So it might be a good time for people like me to get in on the ground floor. I am down with some risk. Although truly, I would rather invest in things I actually believe it.
For example: I saw an IPO recently for Alge Biodiesel. Any thoughts on some of these penny stocks?

The market is down today and is projected to dive more tomorrow....so I'm thinking the time is now.

4Gman: If you don't think a stock can go to zero, I'll send you a list that have, starting with Enron.

Buying GM & Ford? Well, it just like going to Vegas without the trip. Both see bankruptcy as a way out of legacy liability issues. The holders of common stock will be toast. Wanna buy some Lehman stock?

Penny stocks, that is just what they are...

4Gman said:

I am and a total newb in the market so I appreciate any advice. But it seems Ford and GM are here to stay and their stocks will eventually go up....right? So it might be a good time for people like me to get in on the ground floor. I am down with some risk. Although truly, I would rather invest in things I actually believe it.
For example: I saw an IPO recently for Alge Biodiesel. Any thoughts on some of these penny stocks?

The market is down today and is projected to dive more tomorrow....so I'm thinking the time is now.

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Advice...

-Buy Mutual Funds. There are thousands out there and you need to research them to find that works with your investment risk, strategy and goals. Then every month, buy a set dollar amount (like $200) regardless of price. You buy more shares when the value is low and less when the value is high.... This is dollar-cost averaging and it's your best friend in the long run. The idea is to ACCUMULATE wealth over time... not day trade.

-Prepare to invest for a minimum of 5 years.. the longer, the better. If you're in it for short term or to make a quick buck, go to Vegas instead. Seriously!

-Never invest what you can't afford to lose.

-Don't invest if you don't have a minimum of 6 months of expenses saved in a savings account and/or other very liquid cash equivalents. DO NOT INVEST THIS IN THE MARKET!!! If you need to cash out for unforseen unemployement, you will lose your ass.

Penny stocks are VERY RISKY! Prepare to lose all of it.

EDIT:
DO NOT BUY a stocks out of emotion, something that you believe in, "hot stock tip", etc... Buy because it makes sense to own a piece of that company, it's cash flows, management, long terms ability of making profits, etc....

Yes, that's quite a bit of info to research and educate yourself about but that's why mutual funds are better. The fund manager does this work for you within that fund's strategy and goals.

aja8888 said:

4Gman: If you don't think a stock can go to zero, I'll send you a list that have, starting with Enron.

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I understand the gamble. And, correct me if I'm wrong but couldn't you "short" these stocks and come out ahead? As for penny stocks, I know they wont yield much. But inevitably there will be budding industries (like battery's) which might be profitable.

Got Bearings: Great advice..

4Gman: Read the last post by GB!

Shorting stocks in this market is only for Fools, traders, and hedge funds (not for investors).

Please stay away from this market and the auto stocks. Dollar cost average into mutual funds with lengthy and good track records if you are an investor.

Got Bearings? said:

Advice...

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Great info! Thanks!
I have been researching "dollar-cost averaging" and that seems to be the real ticket. Mutual funds seem much safer and a real alternative to a "savings" account. BUT... I must admit it seems like "fun" to play the day trades. although...I guess some craps in Vegas would be much more enjoyable. But I do understand what your saying...especially in this crazy speculative market.

why pay someone "to make all the right picks" (ie mutual fund manager) when you can do the same thing yourself?

it's pretty obvious that even if the Dow continues to decline it probably won't get much lower. maybe down to 8000 pts. anyway, even if you don't hit the exact bottom, you can easily dollar cost average your way into an ETF that follows the Dow. most of the stocks in the Dow pay a dividend, and you can be sure that over the next 20 years the Dow will go up considerably (over time). if it doesn't, we'll all be worrying about bigger problems (ie finding food, shelter, etc).

it doesn't take a rocket scientist to see that industry leaders such as GE, INTC, etc will pretty much always be around (once again, if they go away we will be having bigger problems than worrying about retirement).

since those stocks have been beaten all to hell, now is the time to start getting ready to get into them.

just pick any sector and look for the big players. look for the ones who have lots of cash on hand (makes them more immune to credit issues).

look for the ones you KNOW are going to be here down the road.

Why pay some fund manager to do what can be done with a little bit of your own work? There are PLENTY of ETFs that mimic the exact same thing mutual funds do but with a much lower fee.

if you like oil, go XLE. if you like utilities, go XLU. if you think oil is going down, but DUG. these are all ETFs that are considerably LESS than mutual funds AND you can get in/out like general stocks unlike with MFs where you get penalized for frequent trading.

in general, it's not the homeruns that make you money--- they're just too hard to hit and risky and you're throwing your money away. shoot for the stocks that are more steady over the long run. compound your returns.



just my 2 cents.

Yeah, it seems like "fun" until you're down $40-50K. I'm not even opening my statements for October.

If you are young (20+ years until retirement), you have a long investment period and you can seek out riskier investments for higher returns. They will be more volitile but you will ride out the waves over that long period of time.

If you are between 10-20 years to retirement, invest in moderately risky investments with a decent amount going to Bonds. You still have time to ride out some waves for higher than average returns but you need to preserve a bit of what you have in Bonds.

If you are under 10 years to retirement, you need to be very conservative in stocks with a big chunk of your investments in Bonds. The returns will be much less but you retain what you've invested with little risk of losses and market volitility.

Don't forget, if you hold a stock/MF for over a year, you pay tax at the Capital Gains rate.... which is LOWER than the ordinary tax rate (same rate as wages) if you sell it in under 1 year.

I wouldn't touch *anything* in the stock market that is related to the auto industry. There is too much risk and that goes for both buying or shorting them. GM is probably going to go to zero (bankruptcy) but there is an outside chance that some sort of massive bail-out will avert that. If that happens, do the shareholders survive? Maybe, but the company may still go to zero afterward. Who is going to buy a vehicle from a company in bankruptcy proceedings? They've already announced that they are delaying all future products other than those already committed to ... which means they are stuck building existing product. What future is in *that*?

The recent Volkswagen experience is an example of what can happen. Everyone except Porsche expected shares to go down (so lots of hedge funds shorted them) so then Porsche started buying, which drove the share prices up, and the short-sellers - mostly hedge fund managers - got squeezed.

Personally, I leave this to mutual funds, but I know they're not involved in the auto industry - too risky.

If you are going to buy stocks in this market ... think about stuff that doesn't get affected as much by the current market turmoil. Everyone has to eat. Everyone gets sick. Everyone has to wear clothing. Everyone has to ? ? ? you fill in the blank. A lot of companies that are in these markets have had their stock prices unfairly beat up. *That* is a place you can think about going.

As some of us are getting into our *later* years, and in the U.S. it is in droves from the Baby Boomers, medical companies (drug makers, research biotech,etc) will probably prosper. A long term investment in a health ETF or mutual fund may be the place to start periodically investing funds.

If Obama bails anyone out, it will be "main street" not wall street. so that means as far as the auto industry goes, he'll preserve the unions (or rather the companies that create the need for the unions).

In the case of GM, he will preserve the bonds as they are what drives a company's finances. Without people buying bonds there is no cash.

No cash = no liquidity = dead on the street. If the gov't injects cash into GMs bonds then ultimately the company will survive and their common stock will increase in value.

man if GM gets down to 1-2 dollars a share I'd gladly throw $1000 (just think, that's 1000 shares!!!) at it. who knows--- in 10 years it could be worth many many times that. if it doesn't, I can live with losing most of $1000 (I don't want to, but it's not the end of the world).

1000 shares worth 20 dollars a share in 10 years is an incredible return. Imagine if that was in a ROTH IRA!!!

After the earnings announcements from the auto industry today, you may get an opportunity to get some cheap GM or Ford.

Thanks for the thoughtful replies.
Do you guys know of any good books and websites for beginners in the market? I am only 26 so I have time to learn and a few bucks to burn. Because for me, I need to actually play the game to learn the rules. This is why I am now a lucky owner of 250 shares of GM. SOOOO....did you guys catch Obama's news conference

msnbc said:

Obama singled out the auto industry in his opening statement, calling it "the backbone of American manufacturing and a critical part of our attempt to reduce our dependence on foreign oil."

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What does this mean to investors?

GoFaster said:

I wouldn't touch *anything* in the stock market that is related to the auto industry. There is too much risk and that goes for both buying or shorting them.

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GoFaster: Obama has made the survival of the American auto industry a top priority. This leads me to believe automotive stocks will see a sharp rise (if only momentarily). Also, with the push towards fuel efficiency I can see how the right company could prosper. It wont be rainbows and puppies...but at least it is a good start.

madrean said:

it doesn't take a rocket scientist to see that industry leaders such as GE, INTC, etc will pretty much always be around (once again, if they go away we will be having bigger problems than worrying about retirement).

since those stocks have been beaten all to hell, now is the time to start getting ready to get into them.

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madrean: I have been watching and waiting to get into this market. But who knows when the best time is....it could be now. All I know is I am still kicking myself because I almost bought a bunch of VW shares right before they tripled. Doh!

aja8888 said:

A long term investment in a health ETF or mutual fund may be the place to start periodically investing funds.

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aja8888: Totally on the money with this one. But what about the "soon to be booming" stem cell industry?

Got Bearings? said:

Don't forget, if you hold a stock/MF for over a year, you pay tax at the Capital Gains rate.... which is LOWER than the ordinary tax rate (same rate as wages) if you sell it in under 1 year.

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Got Bearings?: Thanks for this important info. How much of a newb am since I did not know this?

aja8888 said:

After the earnings announcements from the auto industry today, you may get an opportunity to get some cheap GM or Ford.

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aja8888: Well I did.....it was either buy GM stock or toilet paper since both were about the same price today. JK. Seriously, though. Where do you guys anticipate GM or Ford will be worth in a year or two or 10?

Thanks!

The past couple of years have had numerous articles about how the nuclear power industry is poised for a huge expansion in the next decade. Thousands of gigawatts of new electricity will need to be generated for an expanding population that might be buying plug-in hybrids, and new nuclear plants will eventually have to be built to replace older plants that will be decommissioned.

With that in mind, you probably can't go wrong with purchasing GE, Westinghouse, Hitachi, Bechtel, Exelon, and Toshiba. Even if the USA never un-bunches it's panties about nuclear power, the rest of the world demands it and has it as a growth industry - so your stock portfolio will grow with foreign purchases in the industry.

Regarding government support, stock-market investors have a way of seeing through temporary life support to see whether there is any real potential. It could still go either way. If the government holds off with life support until AFTER the company files for chapter 11 and breaks the UAW then look out ... but if you've bought in before chapter 11, you're wiped out. The more likely scenario is that the government intervenes before chapter 11, but the UAW and its contracts survive, and the company gets through by the skin of its teeth. On the other side, GM and Ford will probably be making little money on compact vehicles while still paying UAW labour rates. The gold-plated, but short-term, huge margins on oversized luxury SUV's - which ended up contributing to this whole mess! - won't return in any foreseeable scenario. When the economy recovers, the price of oil will go back up. 2007 was probably the year of "peak oil" ... but we won't know that until after the economy recovers.

I agree with the nuclear or, in some cases, renewable energy play. The new administration wants to push this (after fixing the economy). Be careful what you invest in - lots of companies pushing various renewable-energy schemes won't survive. There is probably faster money to be found with (gasp) traditional energy companies. When the economy sorts itself out, the price of oil will go back up, and so will profits. I will refrain from naming any names, on the grounds of not knowing enough of the specifics of any given company.

My advice is don't invest in any auto stocks. They're bleeding money and that's never good for a long stock investment. Let's not forget the dot com bubble days when stocks reverse split in last ditch desperation. There's a small hope for taxpayer bailouts but with GM and Chrysler burning $2 billion per month each, it would be short lived and soon replaced with the inevitable bankruptcy/reorganization.

My advice would be to invest in Deere (DE) or Caterpillar (CAT). Or maybe gamble on Ford. I wouldn't touch GM.

invest in energy

GoFaster said:

When the economy sorts itself out, the price of oil will go back up, and so will profits. I will refrain from naming any names, on the grounds of not knowing enough of the specifics of any given company.

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AMEN. If you're unsure of which oil co's to invest in you can do XLE (ETF that is diversified and general), or even DIG which is leveraged (you go up OR DOWN 2X whatever general oil does).

check em' out.

XLE is a pretty safe bet. Pays a modest dividend. http://www.marketwatch.com/quotes/xle

http://www.marketwatch.com/quotes/dig
52-Wk High:
05/21 $131.08
Dividend:
4.30
Prev. Close:
$30.31
52-Wk Low:
10/10$22.65
As you can see dig has come WAAAAAAY down. If you are in DIG when oil goes up you could make BOOKOO buckage. On the other hand, if oil cont to go down (which it might as the global economy cont to slow down, then you could lose).

-mark

Just my opinion:

Invest in future energies stocks, both renewable and new conventionals.

Or, less risky: invest in healing products and medical devices industries.

I'd stay away from automotive stocks unless you have particular insight or an amazing magic 8-ball.

madrean said:

XLE is a pretty safe bet.

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Looks pretty good for the long run. Maybe buy some now, add some more in 3 or 6 months, do a little dollar-cost averaging...

4Gman said:

Thanks for the thoughtful replies.
Do you guys know of any good books and websites for beginners in the market? I am only 26 so I have time to learn and a few bucks to burn. Because for me, I need to actually play the game to learn the rules. This is why I am now a lucky owner of 250 shares of GM.

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GM is down 20%+ this morning. How do you feel? I'm not being a smartass either.

... and some analysts are adjusting their expectation of GM's share price to be either $1 or zero, depending who you ask.

GM burned through $7 billion in cash in the third quarter and warned its cash holdings would fall short of the minimum needed to run its business without new funding or other drastic action.

Interestingly, earlier this year, GM said its "burn rate" was $1 billion per month and they had enough capital to last through 2009. What happened and what did they spend the $7 billion in three months on? Hummer TV ads (last night I saw one)?

"Deutsche Bank cut GM to "sell" from "hold" and lowered its equity value to zero from $4, saying GM may not be able to fund its operations beyond December."

Looks like another Enron in the making......but no one will go to jail (just collect large Golden Parachutes).

Meanwhile, Porsche reported record profits from short-squeezing the *%@!* of hedge funds.

Good job, Porsche.

And VW was briefly the largest company, by capitalization in the world. They're still worth $384 EU per share. Hmmmm, maybe the German way of partially socialized business isn't so evil after all? They buy shares in one another so that employees, executives, and the state of Lower Saxony aren't always at the bottom of an investor owned pile.

GM's "cash burn rate" from earlier this year would have been 2nd quarter, which was before the crunch really hit.

The scary thing is that the 3rd quarter results won't even include October, which is when the average "man on the street" finally realized that the economy has a problem.

My understanding is that Porsche's net profits are comparable to their ENTIRE sales from selling cars ! ! !

I wonder how many people are privately cheering Porsche for NSFWing the hedge funds ... and how many of those hedge fund managers will never ever buy another Porsche again ...

seems Ford and GM are here to stay and their stocks will eventually go up....right?

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Oh, Lordy!!! GM and Ford are Toxic Waste.

If you feel like investing in these two, just send the money to me. I promise that I'll return the same that GM or Ford will make for you...