Thursday, March 05, 2009
Toe in the water
I dipped a toe into the stock market this afternoon, adding to existing positions in General Electric and Chevron. With regard to the former, my rationale is that the situation at GE Capital is unlikely to be as bad as feared -- they just finished their audit, and I suspect that the Big Four accounting firms (GE's auditors are KPMG) are being very careful about passing on financial assets just now. As for Chevron: My entire investing life (going back to the late Seventies) it has been smart to buy integrated oil companies when they are beaten down. I see nothing to suggest that it will be different this time.
Of course, our esteemed readers may have a very different view. After all, I could be an idiot. Assuming my time horizon for this money is 5-10 years, did I blow it? What say you?
8 Comments:
By 
, at
Thu Mar 05, 06:54:00 PM:
Did almost the same thing, TH, after too many years of watching from the sidelines. Dipped a toe in with US Bancorp at $10.40, got out two days later with a 20% profit. But I also went for GE, which is underwater - bought some shares at $9.25, twice as many at $7.50. My initial thought was to hold it for some short time or until Immelt is shown the door (although perhaps he'll be the Helen Thomas of CEOs.) A hook for Jeff should bring a pop of a couple of dollars ... and in the long run it seems like GE can not be a $6 or $7 stock - either it's going up to 12 or down to zero.
By , at
Thu Mar 05, 08:15:00 PM:
Chevron's probably good for 5 years. Go past that and investors will start to price in the likelihood of a second and stricter round of climate change legislation. While Chevron has diversified some (unlike Exxon), it will feel the pain.
OTOH, if your side's right about warming not being a big deal, that will be increasingly obvious in 5-10 years, and investors will start pricing in the possibility of existing restrictions being lifted.
By 
Kinuachdrach, at
Thu Mar 05, 08:20:00 PM:
The past is no longer prologue. Obama has made it very clear that he has no time for business, no interest in seeing US business thrive & create jobs & pay taxes.
Of course, that approach is non-sustainable, and eventually even the most rabid leftists will realize that someone needs to make something or the whole society collapses. But in the meantime Obama & the boys are sawing away vigorously on the branch upon which they are currently so comfortably sitting.
Investing these days is only for those with strong stomachs. And even those should be thinking -- Diversification! No-one can predict which entities will survive the coming government-created storm.
By Andrew Hofer, at
Thu Mar 05, 08:38:00 PM:
GE, because the world-class franchises are strapped to a highly leveraged and incomprehensible finance arm, has a strong likelihood off becoming a ward of the state, sold off in parts much like AIG. This will not be good for shareholders. I'm guessing your basis is around $6, which might still work out OK. But I wouldn't expect a lot of upside in the rescue scenario. You have an option on its emergence, though. If it survives without rescue you could make a nice bundle. They have $70B of TGLP capacity, which is about one year's maturities. Not sure what happens then.
By TigerHawk, at
Thu Mar 05, 08:42:00 PM:
Mindles, "option" was the term I used when I discussed GE with my broker -- it is sort of a LEAP, only with a dividend for a little bit and no expiration.
Right now people are insanely worried about lending capacity in two or three years. I am not persuaded that is warranted, but I will admit to some moodiness on this point.
By MTF, at
Thu Mar 05, 10:41:00 PM:
About a month ago I bought some FCX, mostly because watching it gives me a quick view on the world economy as a whole (copper and molybdenum), while offering an inflation hedge in case the Fed can't take all those newly printed dollars out of the system in time (gold).
My thinking is that if technology turns up, or housing, or consumer goods, then the copper market will turn. If any of the Sino-American infrastructure spending has any noticeable effect, then the steel market will reflect that and moly will do well.
FCX became the stock du jour about a week or two ago and shot up, but it's back down. I'll let you know if it picks up again, because it ought to be a good signal that other stocks are ready to be bought. Of course, that might happen sometime in late 2010 or mid 2011...
By Purple Avenger, at
Thu Mar 05, 10:53:00 PM:
I recently bought some American Superconductor (AMSC). I think they're going to score some of those Obama-bucks on the supposed grid upgrades, and a contract with the Chinese is (finally) supposed to put them in the black next quarter after 20 years of red ink.
By , at
Fri Mar 06, 01:15:00 AM:
If you're worried that the bottom is yet to come, why not place a buy stop, i.e. you do not buy a stock until it goes ABOVE a certain value. Best case, the stock goes down some more, and you ratchet the stop downwards. Worst case, the stock immediately moves up, and then down, and you've bought for just a little more than you originally planned.
