First off let me say THANK YOU to the Moderators here.
I know this is a Real Estate forum and they could easily edit this type of post. I’ve put this stuff up here in an attempt to explain and enlighten other investors in the methods I use to invest my real estate earnings. I firmly believe that stocks are a beautiful tie-in to investing in property.
I believe that the USA entered this economic down turn first, and we will be the first ones out. The stock market historically has led the actually recovery by 6 months to a year in every recession. This one will probably be longer…BUT…The time is now to make your moves. I completely understand how bad this countries financial health is… The DIFFERENCE between the U.S. and other countries that have experienced collapses in recent years is this…Our Goverment will actually DO SOMETHING in an attempt to avoid a disaster. I know…I know, these are the same dopes that got us into this mess…BUT???
The absolute BEAUTY of this country is how, in times of crisis, all the bull**** goes away and people remember we are all AMERICANS. We ALL have an vested interest in saving what is the ONLY PLACE ON EARTH were ANYONE can make whatever THEY WANT for themselves!!
There is NO ONE here who more strongly warned of this exact set of curcumstances. We’re IN IT, It’s HERE. But…even I, NEVER thought we’d see the levels to which our goverment would step in to avert an all out collapse.
It looks like sh*t now…but history may see it very differently.
Back to the Automakers…
Nothing I have posted here benefits me in anyway. Every single member here could run out and buy all the Ford stock they could afford and it wouldn’t move the price of this stock by more than 50 cents on any given day. (Ford trades an average of 30 MILLION shares PER DAY!!!) I’m in this for the long haul, as you all know.
I’ve said this here a year ago…There is NO WAY the U.S. goverment is going to sit by and LET one of the remaining domestic auto makers fail.
I completely understand people who are outraged by these loans. I won’t even try to agrue that point. My theory is to play the cards you are dealt. RIGHT NOW the Federal Goverment has just placed a FULL HOUSE in our hands. The worry on Wall St. was that GM or Ford would run out of money before the economy turned around. With $25 BILLION on hand at LOW interest rates that can be paid back over a 25 year period, even the anal-ists on Wall St. now admit that a bankruptcy by an American Automaker is unlikely.
There is it gentlemen…The Senate still has to approve it but the House passed it with a 370 to 58 vote. This bill is tied to the Federal spending bill which must be passed before Congress recesses inorder to keep the lights on in Washington. They are already drawing up a bill for an additional $25 Billion that will go for a vote in the next session for a total loan package of $50 BILLION.
Again…you DO NOT have to agree with it…but you CAN make a PILE of money off it!!!
I’ve been following these posts and wanted to put some into the options. An article I read about this loan you’re talking about said Ford intends to retool their plants making SUVs to change over to small cars by 2011. The option with the longest time I see on yahoo finance is for Jan. 2010. Do you think Jan. 2010 will be enough time to see a significant jump in share price based off this information?
The January 2010 calls (I own the $7.50’s) let you buy Ford at that price out until January 16th 2010. The answer to your question is unknown at this time. What I plan on doing is SELLING half of the options I kow own and use those profits to actually exercise the option on the remaining shares.
Right NOW…the October 2008 $4 calls are trading at $1.22, Ford stock is at $5.00…Here’s the INTERESTING part…Those January 2010 $7.50 calls are actually CHEAPER than a option that expires in about a month!!! What that should mean is…as long as Ford stock moves anywhere NEAR that $7.50 price within the next14 months you STOLE those January $7.50 calls!!! When Kirk Kerkorian offered $8.50 for all the shares he purchased those Jan 2010’s traded up to $4.00!!!
So…let’s assume at some point the geniuses on Wall St. will realize that the world is not ending, people might actually buy homes again in the future (I know this is RADICAL thinking) and our economy eventually will rebound. At that point the light bulbs will start to go off in their pea sized brains. Ford stock (as it has at the end of EVERY RECESSION) will rise. And YOU…can either SELL those options OR convert them to stock.
My failsafe is to convert my position into stock if 2010 gets here before the economy shows signs of life. Be fore-warned…Stocks have historically risen BEFORE all the numbers start to show signs of life.
If we get a nice move BEFORE Jan 2010 in Ford stock (let’s say to the $3.00 level in those January $7.50 calls) I will sell HALF my options (representing 30,000 shares) and use those proceeds to convert the remaining options into stock.
The thing you should remember here is this… When Ford hit the skids they CANCELLED the dividend. The FORD FAMILY basically LIVED on those dividend payments. Don’t misunderstand me here…I sure all the Fords are still doing just fine…BUT…once this company turns the corner you can BANK on those dividens coming back…You want to be a HOLDER of this stock for a few years here. Once those dividends come back the institutions will PILE into this stock!!!
I’ve bought and sold stocks the traditional way. I knew options existed, but knew nothing about them. So I learned the basic mechanics of them when you started posting about this. I really wanted to put a little money into this, but my wife is kinda scared of stocks. We own a couple and they haven’t done very well…even before this current mess. At least I finally have her on my side with REI. I pretty much bought our first property under the premise that it was my baby and she didn’t want to have anything to do with it. She’s come around and I’m thankful for that. She’s now researching things to help us out since I’m overseas. She told me I could buy some options, but she wasn’t for it. So I basically don’t want to disrespect her wishes since she’s supportive of REI now.
That article just made me curious because of the timing of the options vs. the retooling of Ford’s factories.
At least I learned about options. I wish I would’ve known about their potential advantages and how to use them before I bought our last stock. I could’ve saved us some money. As it is now, we just consider the money in that account to be dead to us. We’ll hold on and if they ever come back, we’ll sell (we’re not talking a huge amount of shares anyway).
Everything you’ve said about it makes perfect sense and I do agree with you. I wish you luck and maybe we’ll try something like this in the future.