When to stop buying Ford?

[dr_white]

Sorry, I know, its another Ford thread. This one's slightly different. All the others are buy, buy, buy, this one's a stop buying. What are thoughts on when it will be a bad idea to buy more Ford? I'm thinking $10, but that's just an arbitrary number for a baseless comfort level. Although, going off of historical numbers, $10 is about 20%-25% of historical highs..... Anybody have something more significant to base a stop buying point at?

[phlemboy]

Perhaps a good time to sell/ stop buying Ford is when everyone's telling you to buy. I believe that's a few years away. At this point, it appears their "burn rate" is declining, but they still have to increase revenue. That won't happen until the economy improves to the point where people are buying new cars again.

[fdjake]

That's great question.

It is also one of THE toughest parts of an investment decision.

My personal view is this....

We will see a very clear and defined series of events during Ford's turnaround.

The first part of this has already taken place...

CASH BURN........If we look at the monthly cash burn rate at Ford we clearly see that month after month the number is dropping.  That's why the stock has risen to it's current level.  In THIS economic enviroment, if Ford is month after month burning through LESS cash.....Those cash burn numbers will continue to drop as Goverment incentives kick in and comsumer sentiment rises.

That leads us to the PROFIT quarters.  They posted a $200 million profit one year ago.  They were right on track!!  Then OIL went to $147/barrel and wiped out the consumer and the ENTIRE Automobile business.

Has anyone noticed??????   Oil is $50/BARREL NOW!!!   Gas is $2.00/gallon.....and low and behold.....People are starting to believe we may have seen the worst of this!!!  You know.... goofy people like WARREN BUFFET, MARC FABER, NORIAL ROUBINI.   At some point people who really haven't been affected by this mess (and they ARE out there) will buy cars again.  I know that's CRAZY TALK but we're among friends here!!

Then it happens........Like clock work.....after every recession since automobiles have existed.....PEOPLE WILL FLOCK to show rooms.
At this point WALL STREET starts to take notice.  Mutual funds jump in.  Pension funds start buying Auto stocks.  The dividends come back.
And.......the stock price EXPLODES!!!!  Not goes UP......E X P L O D E S!!
Those dividend payments create a LOT of demand for a stock.  And...the FORD FAMILY wants that dividend BACK......ASAP!!!   Mullaly's compensation package is directly tied to the RE-INSTATEMENT of the dividend.   Wait till you guys see what this stock does when THAT comes back!!!

Porsche from $20 to $300
Chrysler from $9 to $160
Ford from $1 to $120/share (split adjusted)   OH YEA.....You read that right.......$120/share based on 3.... two for one..... stock splits from 1980 to 1998

So.......If this stock is headed to $30 or $50 or higher.....As long as you GET IN......Your MAKING MONEY!!!!!

[d_sbrown]

I am looking for a vehicle right now.  I run a suburban, and was thinking that way again. (5 kids)

My dad commented," Buy a Ford, they're the only ones that didn't take Tarp, and apparently don't need to be bailed out."  Whatever you do, don't buy a car from the government.  As far as he is concerned he will only buy Fords from here on out.  He was actually fairly heated about it.

Made me wonder if there is more sentiment out there like that.

DB

[propertymanager]

The bigger question is when do you sell?  That's the truly difficult part with a buy and hold strategy.  MILLIONS OF AMERICANS with a buy and hold strategy rode the stock market boom all the way up to DOW 14,000 and then hung on as it came all the way back to 6,600.  All their "gains" from the past 10 years were wiped out and in many instanced their retirements were destroyed.

So, the real question is if you bought Ford stock, when will you sell?  When you double your money?  Triple?  when the stock hits $120 per share?  Will you ride it up and then all the way down again?  What's the exit strategy?

Mike

[fdjake]

The exit strategy is to WATCH the economic cycle.  WHY would you ever SELL a car company stock BEFORE the recovery following a historic recession????

This event is exactly what you want.....I HUGE drop off in demand which is ALWAYS followed buy a HUGE pent up demand cycle.

Ride that cycle......You don't want to sell this stock until we are in the MIDDLE of that recovery. 

My feeling is you SELL this stock WHEN EVERYONE ON WALL STREET IS TELLING YOU TO BUY IT!!!!'

That's ALWAYS the top!

[fdjake]

D_sbrown.....

Apparently your father is a very smart man!!!!

http://www.autoblog.com/2009/05/01/survey-fords-image-gets-a-boost-by-nixing-federal-aid/

[brockovich]

I got out today. The will be the next company in bankruptcy. I made a couple grand, time to move on.

[Hoosier4life2005]

Ive been making money roofing houses (HARD work), and now I have $1600 cash.  Im considering going all in on Ford.  I have the time to wait years, I dont need this money, its just sitting in my closet, and I would love to make a good profit on this.

Ugh.. decisions decisions.

[justin0419]

There's the "all the eggs in one basket" discussion.  You're young so you can take some more risk.  You may not want to put it all in Ford though.  Remember you're saving so you can purchase your first house with cash, right?

[fdjake]

Josh,

Don't bother buying Ford stock.

At this point in your life that $1600 can be used to MAKE MONEY in much more certain investments.

If your house painting business gets going, that $1600 could be used for signs, supplies, paint, ect.  The first house you paint on your own should NET you at LEAST $2000.  A few of those and you'll have almost $10,000 in the bank with almost ZERO risk.

Remember your $50,000 GOAL!!!!

You can start buying stock AFTER you get your first property.  You've got nothing but TIME!!!

[fdjake]

Looks like the boys on Wall Street are finally staring to see the light!!

http://www.reuters.com/article/reuterscomService5/idUSTRE56E86K20090715

This is just getting STARTED.....As SENTIMENT regarding the economy improves (even ROUBINI has started to re-assess his DOOM theories)
CAR SALES will improve...

Remember this before you run out an sell your FORD STOCK....

Right now....For the first time in AMERICAN HISTORY we are SCRAPING/JUNKING 13,000,000 cars a year and selling only 9,000,000.  This has NEVER HAPPENED.......EVER!!   Can you say PENT UP DEMAND???

That folks will lead to just one thing.....

A MASSIVE sales surge in new autos....If you're taking 13 MILLION cars a year OUT OF CIRCULATION and SELLING only 9 million, that is UNSUSTAINABLE....

As I have said before......These BUYERS will all hit the showrooms within the next 1 to 3 years.  Sales for FORD will skyrocket.  AGAIN.....This occurs after EVERY RECESSION....It ain't rocket science.....People KEEP their old cars until they MUST replace them....If 13 million cars a year are going to the CRUSHER it limits the USED cars available in the market...Currently, prices for used cars at the auctions are through the roof!!!   This is EXACTLY what eventually DRIVES people into NEW cars.....As prices for used cars increase,  a NEW CAR purchase becomes more and more justifyable. 

Hang in there......The FUN part is about to begin!!!

Merrill raised their price target to $8.75 on FORD......That will look like a BARGAIN 4 years from now.

This is how WEALTH IS BUILT!!!!    Hanging in there, taking some heat, but sticking with WHAT YOU KNOW....How many opportunities do you get in your LIFETIME to buy a stock at $2.00/share that could eventually hit the mid $20 level or HIGHER???? (Ford's stock was actually UNDER $2.00 from November of 08 to March of 09)

Answer.......You DON'T get many!!!

[propertymanager]

I'm still short F at $6.25.   Actually, I didn't play this right.  I should have covered at $5.25 (had 2 opportunities), but I thought that it would get down to $4.50 (I still do).  I have a stop in at $6.35.

I still think Ford will file bankruptcy, probably early next year.

Mike

[allagash]

Mike,

Did you see how they, (Ford), got a quasi-bailout.

If I remember correctly both them and Nissan got low interest loans dubbed for factory retooling.  I think it was pulled from the TARP funds.

I think Ford got 5 billion.

Was about 3 weeks ago.

Definately noticed a spike in their tv campaign shortly thereafter.

-Mike

[allagash]

"award" from Obama:

http://www.qualitymag.com/CDA/Articles/Industry_Headlines/BNP_GUID_9-5-2006_A_10000000000000619021

I stand corrected.....it was 5.9 billion from the Troubled Asset Relief Program.

Chaulk another one up for "too big to fail".

Baseball, apple pie and the printing press.

-Mike