I believe that it is a mistake to invest in any single-company stock, because when you do so, you are betting that you know more about the company's future than most of the other investors in that stock.

"I believe that it is a mistake to invest in any single-company stock, because when you do so, you are betting that you know more about the company's future than most of the other investors in that stock."

Well, sometimes I guess when I purchase individual equities it could be called a "guess"...like when I day-traded Worldcom. But, with few exceptions I don't "bet" in equities...I invest. I invest only in companies where I understand the business plan, the financials, market risks, governmental risks, & cyclical economic risks. It has nothing to do with what "...most other investors..." are doing or thinking.

I dislike mutual funds believing they are slanted towards making lots of money for the fund manager & well...not so much for the individual investor. I also like knowing what I own at any given time. While somewhat possible to know with a fund...it takes a lot of time/effort to ferret out what the fund is holding on any given, say, Tuesday at the Bell. Usually, all you can determine are the 10 largest positions.

Nobody cares more than I do about my money so learning how to manage it is a priority in my life. I'm not going to turn control over to a stranger willingly. Note: don't have any choice in a 401(k).

I think it's quite possible Ford will survive intact although with a very different business plan. At the price it's currently trading I'd be more inclined to trade it than invest long-term unless you're willing to watch it closely & sell on a good pop. I think it could easily take a decade (or longer?) for it to justify a P/E of $10. That's a long time to hold. I'd rather be more shorter-term focused for the next 2-3 years.

/tricia

Triciae says:

"I invest only in companies where I understand the business plan, the financials, market risks, governmental risks, & cyclical economic risks. It has nothing to do with what "...most other investors..." are doing or thinking."

I think you are mistaken. The trouble is that the price at which other investors are willing to sell stock in a company depends on their estimation of the company's future. So whenever you buy a company's stock, you are implicitly claiming that you have a higher opinion of the company's future than the investor(s) from whom you are buying it.

Now, of course it's easy to have a higher estimation -- just decide that you think the company will do better than the seller's opinion, and you're done. What's not easy is to be right about that estimation -- and if you're wrong, it means you just overpaid for that stock you bought.

alphacat,

There are many reasons why people, or funds, sell stocks.

"...you are implicitly claiming that you have a higher opinion of the company's future than the investor(s) from whom you are buying it."

That simply is not true. Or, at least, not for every seller/buyer.

For instance, I sold rather significant positions in several equities a couple years ago because it was necessary to settle an estate. Funds often sell positions for a variety of reasons such as rebalancing the portfolio. A couple decides to sell their stock portfolio in order to raise cash for a down payment on their first house. Parents might sell because it's time to start making those tuition payments for the kids. A couple sells to liquidate positions due to divorce. None of these reasons have anything remotely to do with the viability of the company being traded. I'm sure you get the idea...there are as many reasons for selling/buying as there are individuals trading.

/tricia

If fund managers are so smart ... how come something like 85% of them, using all (or whatever amount) of that vaunted expertise, fail to produce better growth rate than the market average relating to that type of investment?

Part of the reason relates to the approximately 1.5% or more annual fee that they charge for management, (2.5% or more in Canada! ... 'Tain't fair, Canadians, let's start a revolution!). And they get their percentage, whether they produce growth or not.

If you're 50 and plan to operate your retirement plan to age 80, that's 30 years ... at 1.5%, that's 45% of the original asset, without considering compounding. In Canada ... well, how do you like 75% in Can?

Hey! Wait a minute ... I'm still in good health and going strong at 80 ... and have 80% of my assets in equities, no mutal funds bought in the past 18 years or so, after I'd become more familiar with the markets.

If you're 50 and want to run your fund till 90, that's 40 years ... 60% in the U.S., 100% in Canada ...

... you'd better hope that your mutual fund manager develops some growth, over those years, right?

And, at 70, when I began drawing on the fund, I figured that I needed to fund till age 100: I prefer to run out of days before running out of dollars ... and my family are long livers (as are clergy folks).

Actually, I was planning the retirement situation long before age 70 - shouldn't we all? The longer one leaves starting one's plan, and begins implementation ... the steeper the hill that one must climb! The ideal time to start is on the day of one's birth, of course.

While I'm not recommending these stocks ... in difficult times, people buy the type of stuff that Procter and Gamble sells, also Johnson & Johnson. Food. Other healthcare stuff, in the U.S. ... and retirement things, related to all of those Boomers who are about to retire.

Investing about $3,000. at a time, for efficiency of commission rates, after four periodic purchases, getting one stock in each of four sectors of the market, one has some diversification. After half a dozen purchases, more diversification, and a dozen, even more. As one's portfolio grows, when one has more money available for periodic investment, add extra to whichever stock seems to provide the best value at the time.

Investing equal amounts periodically, through rising, stable, and dropping markets proves to work best, in the end. Many try to time the market: few succeed (and when they do - they tend to let you know! Losses appear to install invisible duct tape on the investor's mouth).

Probably a good idea to have some out of country/offshore, as many of us feel that the U.S. Dollar is at risk: not a good idea to have all of one's eggs in that kind of single basket, either. Remember how, a few years ago, US$1.00 bought more than EUR1.00? No longer!

Good wishes for keeping your eye on a far horizon, as well as current situations, when planning one's retirement funding: 40 years ... is 40 years, and in the light of that cicumstance, if a quality stock drops 25% or so, over a period of 5 years, but succeeds in retaining its quality, not an issue over which to lose sleep ... or bite a kid's head off!

Don't sweat the small stuff! Short-term, either.

Relax - enjoy the journey!

And learn as much as you can, without working up too much of a sweat, about the various issues that impinge on your life as well as your assets.

Learning how money works - an interesting hobby ... that *pays* *well*!!

ole joyful

P.S. Imagine - had someone suggested to you five years ago that within a few years GM might be in danger of banruptcy ... you'd have laughed him/her out of the office, no?

"Ford" stock?

"Ford"'s a four-letter word ... as is "Chev". "Dodge" has five letters ... but it's one of the same flock of turkeys.

If you want to take a flyer on it ... some "mad" money, that you can afford to lose in full ... maybe ... not serious investment stuff.

Use about 10% of your asset for speculative, "crazy" stuff, if you like ... but if you lose most of it, don't put some fresh money into the 10% deal for a while, O.K.?

As a former owner of Merrill Lynch Canada stock (interchangeable), I recently fell heir to some Bank of America stock. I'm not choosing to buy any more, for a while ... quite a long while, I expect.

Some bottom-fishing fish may pick up a tasty morsel ocasionally - sometimes a chunk of mud. It takes an experienced fish to learn the difference!

o j

Hi again stir fryi,

Can I change my mind? Well, maybe not exactly "change" ... but how about "revise" my earlier judgement?

In my earlier post, I was mainly off-topic, concerned to offer a different viewpoint to the person who spoke against people buying individual stocks directly.

Also, I was taking a negative view of our home-grown auto builders, largely based on rather unexamined acceptance of recent news.

When I go to look at the recent price action of Ford stock, it's been up and down, and was low about month ago, then built up in recent weeks.

If you look up a chart showing the price levels of the stock in recent times - 6 mos., 1 year or two years - even five or more , it rather appears that at the current price it is near the top of a line that one might draw linking the tops in recent times and extending into the future.

Maybe it will break through that line ... but I think that there's a better possibility that it may not.

It may be useful to watch what levels it moves to in the next few weeks (and using a "Bar" chart, rather than a "Line" chart ... or you might find it interesting to check a "Candlestick" one).

If it does break through that top line - it'd quite likely be a good idea to buy some (using "disposable" money).

I think that it's worth watching ... but I'd keep my money in my jeans, at the moment.

Can I interest you in a stock (income trust, actually - required to pay out almost all of their earnings, but must change status within a couple of years) which is in the water heater rental business (consequently fairly stable)... that's paying 19%? Price 52 week high $13.26, low $6.11, currently $6.74, appears to be forming a bottom. Paying $0.108 monthly.

The above is for your information only ... I'm not recommending that this might be a useful investment for you: only you can decide that, in the light of your whole financial picture.

Good wishes for skillful use of both your income and your assets.

ole joyful

I currently own Ford stock which I purchased about 1 month ago. I am NOT committed to owning it long term, and in fact, review all news daily and recommit to it daily. Ford, by not going into bankruptcy, will have 1 huge factor working against it - Unfunded pension liabilities. Yes, they can negotiate their long term debt downward, which they have, but there is no escaping the pension situation in an environment with "low" stock market values and reduced revenue expectations.

Without a massively huge improvement in the economy which result in massively improved revenues, I think the vote's still out on Ford. But for a short term investment, it could be ok if you watch it with a magnifying glass.

I view my purchase from the standpoint of knowing that if it goes to 0, I can absorb the loss.

Survey: Ford gains edge as rivals struggle
More than 70% more likely to buy Ford because of GM, Chrysler troubles

FREE PRESS STAFF April 3, 2009

Ford Motor Co.Âs edge has grown significantly over struggling rivals General Motors Corp. and Chrysler LLC, according to the results of an Internet survey released today.

Only 3% of Americans were unaware that GM and Chrysler had received billions of dollars in federal loans, according to the national survey by AutoPacific, an automotive research firm based in Tustin, Calif. While the methodology of the survey was not immediately available, the findings were the result of more than 700 online responses between March 31 and April 1.

Because of the federal assistance, 63% of consumers expressed concern over buying a new Chrysler car or truck, with a lesser 52% concerned about buying a GM vehicle.

However, 72% said that they were more likely to buy a Ford vehicle because Ford had not asked for federal loans. Only 15% expressed concern about buying a Ford product.

In a recent interview with the Detroit Free Press, Ford Motor Co. CEO Alan Mulally said that the companyÂs efforts to not take federal money were helping the automaker "a lot" with consumers, and while he declined to elaborate, the AutoPacific survey reveals how much.

Nationwide, Ford dealers have been promoting the fact that the automaker has not needed federal aid, as well as the companyÂs quality gains.

One such advertisement, from Gary Yeomans Ford Lincoln Mercury in Daytona Beach, Fla., says: "I am proud that Ford is doing this on their own and not asked for government loans. Ford has had the courage and integrity to face adversity and choose ethics over convenience. Â These are proud times to be a Ford dealer."

Contact SARAH A. WEBSTER at swebster@freepress.com.

Hi again stir fryi,

Well ... if you'd chosen to buy "F" at the closing price on Thursday, $2.91 ...

... and sold at the closing price on Friday, $3.25 ...

... you'd be up 11%, apart from commissions in and out.

It'd take a few years to have earned that much on a dollar, having put it into the bank.

It took several years for the Canadian Dollar to move from about U.S. 65 cents to about $1.00 (and slightly above - for about a month), which happened when the resource markets rose, especially oil.

Now it's back down to about U.S. 80 cents again ... but I don't think that it will stay there ... if you think that oil prices will continue at present levels over a substantial period ... well, good luck to you.

Some of us think that the values of the U.S. Buck are being manipulated, also.

And with all of the printing that's going on, that won't help any.

Not a good idea to have all of one's eggs in one basket - unless one has utter confidence in that basket.

Canadian banks are evaluated as about the solidest in the world, stock prices have been depreciated in recent months, along with the others ... and are paying 5.5 - about 8.5% dividend, which several analysts think to be reasonably unlikely to be cut.

Canadian oil stock prices have been beaten down, recently, as well. We're the largest outside supplier to the U.S. Wouldn't it feel less painful, when you fill the tank, to know that you were making some of the profit?

Several of our special companies who have contracted to pay out almost all of their earnings in order to qualify as tax exempt have been paying 10% - 15 - 20% annual rate ... and most pay it monthly.

That's about:
Amount invested: $100,000.
Monthly cheque received: $1,000. (maybe up to $1,500. or even more).

Not too shabby.

And, as I mentioned earlier ... one such company that rents out water heaters ... a fairly stable market ... currently pays about 18% ... unit price slipped from $10.00 to slightly under $7.00, so far this year ... 52-week high $13.91.

I hope that you're having a great spring. Grass starting to green, here.

Gotta clear the poles and strings from the garden so that the landlord can give it preliminary cultivation, to break up residue and hasten rotting, and make seedbed preparation easier.

ole joyful

Could have already made some money:

Ford shares surge 15% in wake of debt-reduction plan
http://www.freep.com/apps/pbcs.dll/article?AID=/20090406/BUSINESS01/90406014&s=d&page=3#pluckcomments

stir fryi, you can live vicariously thru me - I'm still hanging on for the moment. If you are still thinking of trying to get in, I think you will have a chance to buy it much closer to $3. But, if it trades at that price again, you may not want it!

kec01 -- I don't have to now. My DH came home the other day and told me he some (actually A LOT!). We are in it for the long haul though.

Another read from todays Detroit Free Press:

Car shoppers turn increasingly to Ford
http://www.freep.com/article/20090409/BUSINESS06/904090367

Hi stir fry i,

I assume that your husband came home and announced that he'd *bought* quite a lot of "F"?

Sounded like that was the action that he took.

If so - I hope that it works out well for you two.

And I hope that things work out well for you both (and family and loved ones) ... whether you chose to buy Ford
stock or not.

ole joyful ... who doesn't have any "F".

Hope it works out for you, stir fryi.

I'm going to bail out of mine pretty soon.

Hi kec01,

"Bail out" ...

... that's sort of like in the boat scario (that was supposed to be, "scenario" ... really, it was!)?

Have a glorious Easter - if it's part of your life credo.

ole joyful

INTERESTING...

Ford stock surges on report

Ford Motor Co.s stock surged nearly 15% today after a Goldman Sachs analyst issued a report saying Ford could benefit from a Chrysler LLC or General Motors Corp. bankruptcy.

Ford, according to Goldman Sachs analyst Patrick Archambault, is likely to survive without government aid, is in position to obtain any additional labor concessions that GM or Chrysler gets from the UAW and capture a larger percentage of U.S. new vehicle sales.

"We see Ford as well positioned to capitalize on a more than 50% decline in Chrysler (market) share and the pruning of GMs product portfolio," Archambault said in a report today. "With GM and Chrysler likely to file for bankruptcy in the coming weeks we think the stage is set for a sea change in the structure of the U.S. auto industry."

While Archambault put a buy rating on Ford with a $6 price target, he is more optimistic than others about Fords stock.

On Friday, Credit Suisse equity analyst Chris Ceraso said that even while Ford is making progress, its stock price is over-valued, in part because the company isnt expected to be profitable until 2011, and because Ford has struggled to gain market share over the past 10 years.

"We think the stock is worth about $3," Ceraso said. "Thus, with the stock trading closer to $4, we do not think investors should chase it."

Fords shares were trading at $4.35 at noon today, up 55 cents, or 14.5% from its close at $3.80 on Tuesday.

Contact BRENT SNAVELY: 313-222-6512 or bsnavely@freepress.com.

stir_fryi,
Thanks for posting this question. Your comment, and those of the others got me thinking about Ford. I visit this forum often, just to learn, but have never posted. I did my own analysis and decided to buy a modest amount of shares. To date, I have nearly a 50% gain. My mutual funds are still dragging along...

Some times you got to go with your gut.

Bought Ford last week at 3.5, held for four days and netted 5.13 when I sold it. Could have stayed longer and made more but think I'll wait till it drops to 3. This is not over yet and Ford has not been turning a profit, only losing slower. Unemployment, especially in Michigan, is still rising. With less people working less everything is going to be sold.

Well we panicked and bailed out at around $10 -- still a hefty profit.

We bought back in the late 13s and it has took off again.

I wish I had had a crystal ball but I guess I should be thankful for what I got.