Should I buy some GM stock right now?

Oh yeah, I would never buy a stock without an automatic stop order.

I really enjoy doing this, and since I'm a newbie I like to ask questions, so, even if they sound like something I should have known, I'll ask anyway.

When you say farmer, to buy oil, are you talking about the commodities market?

How is that different from buying stock?
Does one purchase commodities from their same online broker?

I'm comfortable with the stock buying process, I have not delved into options, and won't until I really understand them.

Please, educate me farmer.

He meant stocks, Chai, like Exxon (ticker: XOM) which are a bargain right now
and eventually will spike up again.

I would not buy GM unless you can invest in very large quantities and will
profit nicely from a one point gain. A friend of mine did this with Ford (F):
bought a huge quantity at $ 1.20 and sold when it was at $ 2.20, but as I said,
it only makes sense if you can buy large quantities.

It's down to $1.58 for good reason. Don't forget that this is a company who has mismanaged billions of dollars worth of assets. The stimulus package will not change their business model or business plan. American car manufacturing is dying and will soon be completely blown out of the water by the Japanese, Korean and German auto makers. The only reason people buy American is because it makes them feel patriotic. If you wan value, look to Asia. Quality? Look to Germany and Japan.

Watch this stock to dissipate over the next decade.

If you're looking at long term investments seek out water purification companies and renewable energy.


Also: Don't get stock advice online or from a financial planner. Real advice should come from an accountant or actuary. A financial planner is a salesperson and 99% of people responding to stock advice online are not qualified to do so.

Sorry AcguaryinTrianing I know it is sport and very PC correct to place all the blame on the big three for the big three problems however without the banking problems and the price of gas going up to 4 dollars plus within a short time frame the big three would have been making a profit now. The big three have zero blame for either of those two events.

If the comsumers no matter what their credit rating are having a hard time getting loans for cars then no car company is going to earn a profit.

In fact none of the world major car companies that I am aware of is earning a profit this year.

Doesn't GM have their own bank to create/manage loans for people who buy their cars?

I wonder if they've tightened their lending standards?

However the sales figures for the Big Three looked very suspicious just before this conomic meltdown . The sales were huddled around sevral models of pickups and other large "Saurian" models.All of Fords profits came from its truck division.
The companys had no creativity to try to foresee rising trends, and any research that was underwritten during the late 1990's was scuttled in the time just before 9/11.
The new interest in fuel efficient cars and hybrids had to be reinvented in the post 9/11 time. I follwoed the Ford Esacpe hybrid (which I recently bought a model of) and this story is one of dumb headed obstinacy by the Ford leadership.

We had all been here before when fast fuel prices increases force Amercian consumers to move toward smaller cars. See the oil shocks of the 70s.

However those move never seem to last and once more Americans seem to turn to large cars and trucks.

The big three did what the market place was demanding at the time wisely or not.

GM source of funds to make loans for thier cars was drying up and therefore they could only loan to the very top credit worthy customers.

A few billions of the bailout did go to GM finance arm, so they could open up to some degree in their loaning,

bill wrote :



but were the able to do it at a profit ?
i bought an olds-intrigue in 1999 at .9 % financing for 60 months . that was not a realistic financing rate - but made it a good deal for me .
btw the olds performed quite well for 9 years without major repairs - but finally started to rattle and squeak .
it become a bit of a gashog - so we are now back to a four-banger - with the same 200 hp as the olds twincam 6 .
hbg

Chai2,
you would be a fool to believe in Fundamental Analysis (or even worse Technical Analysis as Famerman seems to be suggesting) and thus try and pick individual securities and/or time the market. Automatic stop orders are simply more stupidity!

These types of actions are pure folly!

By far the better bet would be to firstly assess your risk-tolerance and your time-horizon in conjunction with asset allocation, then review Index Funds in the below context:

You need to learn about the Random Walk and the Efficient Market Hypothesis as per "A Random Walk Down Wall Street, written by Burton Malkiel, a Princeton economist, is an influential book on the subject of stock markets. Malkiel argues that asset prices typically exhibit signs of random walk and that one can not consistently outperform market averages. The book is frequently cited by those in favor of the efficient market hypothesis."

http://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street

Monkeys throwing darts at stock charts are statistically as likely to do as well as your choices or for that matter so-called "professional money managers" / "financial advisers"

"It is difficult to get a man to understand something when his salary depends upon his not understanding it." - Upton Sinclair, (1935)

Three Annual Reports from Warren Buffett mention Index Funds!
1. ..the best way to own common stocks is through index funds...
- Warren Buffett, Berkshire Hathaway Inc. 1996 Shareholder Letter
2. Additionally, those index funds that are very low-cost (such as Vanguard’s) are investor-friendly by definition and are the best selection for most of those who wish to own equities.
- see page 10 of Berkshire Hathaway Inc. 2003 Annual Report
3. Over the 35 years, American business has delivered terrific results. It should therefore have been easy for investors to earn juicy returns: All they had to do was piggyback Corporate America in a diversified, low-expense way. An index fund that they never touched would have done the job. Instead many investors have had experiences ranging from mediocre to disastrous. - page 5, 2004 Berkshire Hathaway Annual Report

Talk to Chuck: "Buy index funds. It might not seem like much action, but it's the smartest thing to do." - Charles Schwab, Money Magazine - p. 88, Jan 2007 Issue

"Most individual investors would be better off in an index mutual fund."
- Peter Lynch

"Most of my investments are in equity index funds." BusinessWeek & The Parable of Money Managers
- William F. Sharpe, Nobel Laureate in Economics, 1990

So investors shouldn't delude themselves about beating the market? "They're just not going to do it. It's just not going to happen."
- Investors Can't Beat Market, Jan 2, 2002 - Daniel Kahneman, Nobel Laureate in Economics, 2002;

"And the world is a better place (prices are more rational) when misinformed investors admit their ignorance and switch to a passive market portfolio strategy."
- New Fama/French Paper

"Empirical evidence provides no support for the claim that active management of small-cap portfolios is more fruitful than it is for large-cap portfolios."
- Richard M. Ennis, The Small-Cap-Alpha Myth Also see: The Big Lie, by William Bernstein & International

"Returns are the result of risk compensation, not price speculation."
"Most people are beat up by the market, instead of beating the market."
"The only time you should sell is when you need cash, or you have given up your faith in capitalism."
"Risk drives returns. Most investors get the cart before the horse, where the cart is return and the horse is risk."
"Markets were meant to be free, not managed" - The 5 quotations above by Mark Hebner

"NONE OF US IS AS SMART AS ALL OF US" - A sign at Wells Fargo Bank during the creation of the Index Fund, circa 1971.

http://www.ifa.com/library/quotations.asp

I should also point out that dollar-cost-averaging is vastly superior to notions of market-timing or a belief in buy-sell signals using fundamental and/or technical analysis.

And as far as buying commodities.......studpid.........stupid.......stupid! A properly balanced portfolio will contain securities that are commodity based.

chumly
your comments and quotes are all very debatable. i.e. efficient market analysis.

warren buffet did not make his money with index funds.

I refuse to bow to the idea I cannot learn something because it is "too complicated" I can learn and utilize anything in this world that I put my mind too.

For every comment you wrote, and quoted from others about how people aren't capable of succeding at something, you're reinforcing doubts people have about themselves. There are also those in the financial field who do not adhere to the methods you mention, and have done very well. You may say it's luck. How do you know the luck isn't on the side of those who follow EMT.

I'd advocate for people to decide for themselves what they can do, and not listen to nay sayers.

I'm not throwing darts at a dart board.

In any event, I'm far from stupid, and would thank you to keep that in mind.

How's your portfolio doing?

Well the bulk of my funds is in a money market 401 K and had been for a long time.

It does not go up a 100 percent but you never see a yearly return of -40 percent either.

The small percent of my savings that is in the market have been cut in half so now it is even a smaller percent of my total savings. Lovely to see what a year ago was worth 50 k turn into 24 k as if by magic.

Yes in the long run the market is far better and assuming I get to live long enough I am sure that my funds in the stock market will do better then the money market.

If you want to use WB as your yardstick I suggest you read what he has to say about index funds in the context given, to wit:

Three Annual Reports from Warren Buffett mention Index Funds!
1. ..the best way to own common stocks is through index funds...
- Warren Buffett, Berkshire Hathaway Inc. 1996 Shareholder Letter

2. Additionally, those index funds that are very low-cost (such as Vanguard’s) are investor-friendly by definition and are the best selection for most of those who wish to own equities.
- see page 10 of Berkshire Hathaway Inc. 2003 Annual Report

3. Over the 35 years, American business has delivered terrific results. It should therefore have been easy for investors to earn juicy returns: All they had to do was piggyback Corporate America in a diversified, low-expense way. An index fund that they never touched would have done the job. Instead many investors have had experiences ranging from mediocre to disastrous. - page 5, 2004 Berkshire Hathaway Annual Report

Sadly you simply prove optimism as to beating the net averages (after taxes and expenses) springs anew. Nonetheless market averages cannot by default be beaten on average over time. Unless or until you understand that you will not understand basic market dynamics, let alone the advantages of passive investing, asset allocation, and a given time horizon as per risk/reward.

If you want to claim such principles are so-called "very debatable" then you ignore these principles at increased risk and decreased reward. Good luck with your after-taxes after-expenses coin tossing!

Hi chai2,
As to how my portfolio is doing, I have been passive-index-investing on a global capitalized basis since 1980, dollar cost averaging along.

As such, for the equity position of my portfolio, I have gotten close to the total returns of the global equity markets, compounded annually, on a global capitalized basis.

If you have the wherefore-all to assess the total annualized compounded returns of the global equity indexes on a capitalized basis you will know the equity portion of my annualized returns. It's not hard to find this data http://www.vanguard.com/ you are looking for all the global equity indexes summed on a capitalized basis with all returns reinvested and compounded; no market timing, no fundamental analysis, no technical analysis, no trading, no choosing one stock over another. Asset allocation (within the equity position we are talking about here) is simply done by capitalization; as such if an index becomes higher valued, it represents more of the given total assets, as would the reverse be true.

Understand that the asset allocation of my total portfolio is based on my time horizon and risk tolerance, not on market timing, not on fundamental analysis, not on technical analysis, not on trading, etc. That being said however my asset allocation has / does / will change as my risk tolerance and time horizon decrease.

Asset allocation of my total portfolio being all classes of merited investments not just equities.

The CB's Market Volatility Index is near DEPRESSION LEVELS.Dumping money into Index funds as a "DCA" strategy is not very good of an indea since the entire world market is bouyed by the volatility index , and its a US driven value.
Most all index funds are tanked. VALUE funds are still a good investment (My mentor is Mr Bogle not Warren Buffet, who, as of this date, is watching his market philosophy drag his own investments down)

Anyone can be an expert in good times, if you wish to make money, you must remember that its all risk capital. There is no sure thing. Consequently, armed with that, and further armed with market research, go forth and play with stocks on a cyclic basis. Normal trends are cyclic and result in market cap changes of several orders of magnitude/PE over several years . Using stop orders is a guess (of course) BUT, if you wish to actually make money, its the way to go.

I buy stocks in a simple means and Im in good shape, I choose the stock area (like energy and, right now, GAS is a good a medium future investment, say 6 month windows). I invest enough so that one point of market change is 1 to 5 thousand dollars. Follow some basic stocks like Procter and Gamble or Schlumberger (both are down from 1 year returns) for some experience building They can be tracked on Barrons annual reports website. You can see the built in timing. If you miss a market cycle, just rest yourself and work toward the next one. It requires at a minimum, about an hour a day of close evaluation and a good broker or on-line subscription (I use a broker just for timing benefits).

THe market is in an almost unprecedented territory. Normal advice is being shattered daily and guys like Buffet and Cramer are now the pariahs. (Buffet;s 2009 is already down by 14% as compared to -8% in the S&P, and Cramer is a joke ). My returns on CAbelas alone , have been about 22% by cycle playing the last year. (Now, I must say that Ive lost some other in some poorly timed energy funds(I didnt get out in a timely fashion and , like a pig , I said,"well Ill wait it out and itll return" Well, it didnt. Overall, Ive been in positive territory for the last 4 yars (I did lose in 2002 when I adoptred (finally) an active market participation)

The depression in all commodities has struck the entire market and itll be an opportunity to bottom feed in all commodities for a while. Im looking across the baord at all metals and who are the big players in each one. Thats my short term research.


Ive got an equal amount of good cap in Tax free munis and in cash. ALL my market money is that which is not part of my living income, and when I get good returns, I always transfer a portion to my "walnut pile" .

exactly.

what I don't understand is chumley's adversion to stop orders.

when you buy it reduces potential losses, as the stock rises, you raise your stop limit to lock in gains.

Chumley, I dated a market timer long long ago. What I'm doing is nothing like that. I'd love to buy stocks and hold it long term. That is, as long as the trend continues in an upward fashion.

If it doesn't, I'll look for a better deal.

Besides, I'm having great fun learning this, and while the market is going down, I'm going up.

Chumley, IMHO, has bought into Malkiehls book LS&B. Remember , he wrote the damn thing over 30 years ago when information tech wasnt as freely available as it is today. His mantras are debated by the STREET and its good coffee shop talk, but I dont buy the concept of Passive amrket participation as a way to jump economic class. Youve gotta get in the trenches and analyze what's there. Malkiehl doesnt like tech and fund analysis (well ok, just dont try to make a cosmic law out of that ).

STop orders are a way of inducing as much discipline as you can stand. WHen I go in, on a stock, I usually go for more than a few points of rise and , BAsed on some aspects of random walk, we can predict future ASHORT TERM performance as well as loonger terms.

As Far as Malkiehl and his thesis, I say duhhh, As if it were so worldhsaking. The random walk trens are always UP. Well yeh, but mif your market participation were controlled by the time in the 1930's up until the late 40"s youd have seen that the market went nowhere. However, certain components of the market were outstanding performers.

I like "Sin and basic needs of life" as a market strategy. Its a realistic outlook , and its fun.

Farmer, what got me into all this was Phil Town. Instead of, as Chumly would have made me feel let's say a year ago, that it's all out of my hands and that it would just be too complicated and hard for an ordinary person to understand and work with.

It's not. Period.

Especially with internet access. Sure, 30 years ago when studying the stock market meant days and days of work that today can be done in a few hours, it would have been too much.

All due respect to chumly, (and if his investment strategy works for him, fine), reading his posts only seems to emphasize to me the belief that the stock market should be left to those who know better, and it's myterious ways will boggle the mind of an ordinary human.

So, who are these people to whom we entrust our money to purchase indexed funds and look after our future for us?

oh.....yeah....people......people just like me, but who happen to have a job working for a brokerage firm.

What did they learn that is so impossible for you or me to master?

Answer: nothing.

I may not have this percentage exactly correct, but something like 80% of the market is controlled by a small percentage of firms. Firms that collect our money and make us believe they have mysterious powers to make the right choices. And of course, being so large, it takes them a long time to get in and out of markets.

Us individuals can see them doing that, but have the advantage of being able to instantly make a move in the correct direction, rather than slowly doing it over weeks, even months.

What seems to be misunderstood, is that although I can instantly make a move, that doesn't mean I hadn't, or won't be waiting for week/months to choose the proper time.

Yes, I'm new to this game, but that's my own stupid fault.

I came from a family where my father ate lunch while listen to the stock reports on the radio. Baron's was always sitting around the house.
His mother came here during the 1920's, not speaking the language. The first thing she did was start to pick up the english language by reading the comics in the newspaper (kind of an early Rosetta Stone course). The 2nd thing she learned to read was the WSJ.

If I loose money, I know because it was because of my own decisions, not some guy sitting at a computer in Cinncinnati.