Wednesday, November 26, 2008

Gauging Whether Auto's Will Declare Bankruptcy Thru Watching Share Price Level

From my Bberry: TB

When one cannot possibly know all the variables, is it sill gambling ? Because at least with gambling, you can see all the odds that are against you - in roulette, you can see the 36 (37 when those sketchy tables have 0 and 00) numbers against the one number you may have chosen.

However, when putting money into the stock market, there is no way you can know - unless you are like most astute investors and getting inside information or are privy to one on one meetings with the CEO's (how that is legal is beyond me) - all the variables that are effecting that company. You could be thinking a company is performing well due to strong management and as that thought travels through your mind, management might be having a huge fall out behind closed doors or about to reveal massive accounting errors.

BUT, the first ones company news will effect are the people who are most financially biased to make a quick buck from it - and that is brokers.

Remember, brokers make money on commissions so the volatility is making them squillions at the moment. They make just as much money on a wild downward spiral as they do on an upswing.

So, my point is, the people who have the best chance of sniffing out what is going on in the future of auto are the brokers. They would have insiders on speed dial. I have been following it quite closely and here is my two cents worth that you can follow day to day.

My belief is that GM (ticker: gm) at 3.20 and Ford (ticker: f) at 1.30 are the breakeven share prices - ie the market undecided which way the bailout/bankruptcy talks will go. Any uptick above those prices are an indication someone has heard something.

Happy watching
Sent via BlackBerry by AT&T

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