Stock trading nerds, need advice...

BGCarrera32 · 02-03-2010, 09:13 AM

Question:

I bought a chunk of Ford last year at $2.75/share.

Today its trading at $11+.

So I'm past a 300% return on my money. They've had grumblings lately that due to their high debt load they may do something like a reverse split (I think) to help refinance the debt this year. Remember, they didn't take the bailout.

When do I dump it or should I hang on to it? I haven't a clue...

Thanks

Bill Douglas · 02-03-2010, 09:37 AM

If you have made 300% on your stocks, please don't take advice off anyone around here - especially me.

Well done

flatbutt · 02-03-2010, 09:50 AM

a reverse split? so instead of 1000 shares at $11 YOU GET 500 SHARES AT $22?

BGCarrera32 · 02-03-2010, 10:11 AM

Quote:

Originally Posted by flatbutt

a reverse split? so instead of 1000 shares at $11 YOU GET 500 SHARES AT $22?

See I don't know. They have billions in debt as they put everything from the CEO's pencil sharpener to the blue oval logo up as collateral. I have a hunch they are going to do something to screw the value over- and I don't understand this stuff. I can usually pick some winners but its getting out at the right time that I suck at...

chuckr · 02-03-2010, 10:33 AM

I'd keep it and buy more.... great long term investment, one day you'll tell your kids, I bought Ford for 3 dollars !

Rich76_911s · Rich76_911s's Garage

Quote:

Originally Posted by flatbutt

a reverse split? so instead of 1000 shares at $11 YOU GET 500 SHARES AT $22?

Yes that would be a reverse split.

But as far as I know a reverse split will do nothing to mitigate debt, unless it is a magic split?

BG I did the same thing with ford. Unfortunetly I have not held onto 100% of my position. I've been actively selling calls in it from $8 up to now, losing stock along the way

I don't think anyone can really tell you what to do though. Certainly if my crystal ball had been better I wouldn't have started selling pieces of my Ford Position at $8 and on.

You could start selling calls in it. Which would be a buy-write. And what I have been doing.

If you are scared of the downside but want the upside profit potential. You can either hold onto your stock and buy puts. Or you can sell the stock and buy calls. Both would leave you with the same risk characteristics, both also COST money. Buying a put is like insurance against a downward move in stock prices.

You could sell half your position and keep the other half. In essence playing with the houses money.

Also realize that if you sell, you will have capital gains taxes to pay.

Did you buy Ford as a long term investment initially, or as a trade? If you bought it for the long term investment and are only selling because you saw such a huge profit, do you have a better opportunity elsewhere with your cash?

BGCarrera32 · 02-03-2010, 10:47 AM

It is actually stock I have sitting in a self managed IRA. So long term investment is key I guess. I just hate losing money...if I did sell it I guess I am not quite sure where to go with it just yet- so maybe that's my answer.

Have you messed with ETF's at all?

Rich76_911s · Rich76_911s's Garage

Let me preface this with saying that although I have some experience trading and some knowledge in Finance, there are much wiser and better people to consult on this board let alone in the world than me. Nor have I done any great amount of research into the financials of Ford lately. So take whatever I say with a grain (or a block) of salt.

How much of your IRA is in Ford?

If it is a high percentage of your overall IRA, I would likely suggest moving into a market index etf like the SPY. Having all your eggs in the Ford basket is a bit riskier than I would like to be for a retirement account. You may be different and have different risk tolerance than I do though.

If your Ford exposure is a small % of your portfolio then maybe it is worth leaving alone, and holding onto until your grandchildren are grown and you can brag to them about buying it at $2.75.

jyl · jyl's Garage

If you're evaluating a stock as a long-term investment, you need to do the work to analyze the fundamental outlook for the company and the stock's valuation, and have a view on the same factors for the country's market. F is a company with a long history, in an industry with history and discernible trends. If you wanted to use a stock to learn about fundamental security analysis, it would be a pretty good one.

Security Analysis by Graham is a good book.

If you're thinking about short-term trading, that's a different story.

McLovin · 02-03-2010, 01:15 PM

Quote:

Originally Posted by chuckr

I'd keep it and buy more.... great long term investment, one day you'll tell your kids, I bought Ford for 3 dollars !

It's awesome, my grandpops was telling me the other day how he bought GM at $3 40 years ago and is still holding it today.

sailchef · sailchef's Garage

I bought it at $4. Sold half last week.

Rot 911 · 02-03-2010, 02:39 PM

I bought at $2.89, then again at $4.70 and once again at $10. I am holding.

enzo1 · 02-03-2010, 06:18 PM

sell enough to pay for the stock, 0 invested and let the rest run..... Toyota is making it easier for Ford to take market share

aways · 02-03-2010, 06:30 PM

I'd sell half now to lock in nice a profit and let the rest ride.

stomachmonkey · 02-03-2010, 07:53 PM

Bulls and Bears make money. Pigs get slaughtered.

Nothing wrong with taking money off the table.

Were it mine I'd hold it.

Which means you should dump it.

trader220 · 02-04-2010, 07:02 AM

Any stock split does ZERO for the debt. Nadda zippos. What you might want to do is collar the stock position, buy a put and sell a call for zero or low cost to lock in your profit.

If you're interested in options PM me, I spent 20 years as a professional options trader with seats on several exchanges