What is the problem with the Big Three Auto Industry? Are they ever going to find a way out of their current funk? Is now the time to take a chance to buy Ford or GM stock? These are the questions people are asking quite frequently these days, as the companies upon which so many people have based their livelihoods over the last century flounder and struggle to stay alive.
For many investors, these questions arise as they look to potentially invest in one of the Big Three companies in the Auto Industry segment. The main reason that they’re looking at these stocks this way is because Ford and GM stock can be bought at a very low price. The question arises however, is it low enough? While a purchase may be in order for sentimental reasons, like remembering the industry where you worked for 20 years, the Big Three Auto Industry as an investment is a terrible idea right now.
Bargain hunters invariably want to buy low and sell high. Looking at the price of GM stock, which hit its peak at $38 dollars two years ago and is at $1.50 or so today, you can see that the range in which the stock has traded is quite large. Many people will look at this and think that once we’re out of this economic funk, GM can easily return to $38 a share or even more. Unfortunately, the chances of this actually happening are nearly zero.
Why am I giving such a terrible prognosis for the Big Three’s stock values? It takes some serious digging into the history of the Auto Industry to really be able to evaluate what the root causes are. However, if you simply look at a chart of GM’s stock over the past 10 years, you will see that each rally GM has made out of its declines have failed to bring it to a new high, while the lows have just kept getting lower. This shows the inherent weakness in GM’s ability to continue to pay dividends – the factor which has made them such a bellwether blue chip over the past 50 years. Moreover, as Ford and GM take on more and more debt in this economic hailstorm just to stay in business, their ability to pay dividends may be forever damaged. Buying the Big Three right now and expecting them to rebound to their previous glory is as terrible an idea as buying a Chevy Vega.
However, looking at the stock market as a whole, not all of the potential scenarios are as dim as the Big Three Auto Industry’s. Without a doubt, there are many, many solid stocks out there that have been damaged by this decline, even though their overall business models remain quite good. Read more here about how to Buying Stock Online With Confidence even in this recession. This article will show you how to find excellent values that are poised to profit, no matter what the overall market is doing!
P.S. Unlock your financial abundance with the help of emotional freedom technique, even despite recession.
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