July 3, 2008
General Demoted
GM Bankruptcy `Not Impossible,’ Merrill Analyst Says
Merrill cut its share-price estimate by 75 percent to $7.
That’s helpful. And 75% only rates a “cut?” Surely 75% deserves at least a “slash.”
Cat: | Time: 11:30 am (utc+8)
July 4th, 2008 at 6:42 am
your close … more like “slash and burn”
July 4th, 2008 at 9:05 am
Todays GM is the final nail in the coffin for US industrial leadership. Once a model flagship of worker-corporate balance, now a burning wreck.
July 4th, 2008 at 10:50 am
Hudson: I’m just glad I dodged this bullet because I foolishly (yes, once again) thought GM looked “cheap” below $17 and considered buying it. I’ve crossed my heart that I’ll never favor the funnymentals over the chart ever again (You hear that, honey!)
July 4th, 2008 at 12:17 pm
The credit analyst for Chrysler, GM, and F have all been buying too deeply. These analyst have been giving out 72 month loans out like candy just so they can get above their sub prime rating. They can try to manipulate their sales with their loan terms, trade in allowance of upside down loan for refinances, auto monthly gimmicks offers, but the bottom line is that those loans will not be paid and will result in repossessions and charge offs. Too many things will happen in 6 years. I don’t know about Toyota or the other Honda, but I don’t think they are playing these games yet because they don’t have old pensions cost from the motor side.
July 4th, 2008 at 6:53 pm
I bought some GE based on a RSI of 20. Got my pop-for one day, continued down oversold.
July 4th, 2008 at 8:16 pm
Hudson: I wouldn’t buy stuff based on oscillators like that because there’s nothing magic about 20 or any other number. Just my 2c.
July 5th, 2008 at 1:25 am
Right, Sub 30 oversold readings can go on for days in smaller cap stocks but GE had not been this low for quite a while. I have been looking for Positive divergences in Dow/SP stock occillators during this downturn and I am still looking(0 so far).
July 5th, 2008 at 11:48 am
CM, maybe the problem is with the quality of your funnymental analysis, not with the idea of using it…
i, of course, would rather trust the chart. However i know of many hedge funds that made money shorting the same financials you bought, basing their work on fundamental analysis.
July 5th, 2008 at 1:47 pm
Born2: Yes, my fundamental analysis was deeply flawed because I didn’t anticipate that they’d all eliminate /drastically cut their dividends — that was my major mistake that has cost me an almost hard to believe amount of money. (It’s OK, I’ll make it back by trading, which is nearly always the case when it comes to my “investments”.)
July 5th, 2008 at 10:10 pm
Thinking out loud, not arguing here. I would think that anticipating a future dividend is not really part of fundamental analysis. It would help to rationalize whether people “should” buy or sell the stock in the future but it has nothing to do with forecasting the cash flow, balance sheet strength and earnings.
I am probably not making much sense. But Fundamental analysis should focus on the company’s ability to generate earnings (or lack there of) in the future. The dividends follow from the earnings, not the other way around.
Had we figured out that the Financials would not be able to generate good earnings, nor maintain a good balance sheet, then we would’ve figured the dividend would be cut and the stock shouldn’t be bought.
I of course, do not know how to foretell any of those things, that’s why I try to limit my simpleton mind to the price charts. Of course, that did not help me this week when my coal stocks got murdered…
July 5th, 2008 at 10:50 pm
I noticed coal/steel stocks getting very volatile, Take a look at PKX. The kind of stock Warren Buffit tries to avoid. One big analyst called a buy on basic materials,causing volume spikes in the material ETFs.
July 6th, 2008 at 12:16 am
Born2: You’re right, dividends follow earnings, but I look at historical dividend yields because they’re much smoother and “truer” than earnings … I anticipated that management would do everything they could to maintain the dividend, but no, the damage was too great — dozens of financials that had long and very respectable histories have been destroyed and taken down their stakeholders (including me) with them.