Buying Countrywide Stocks -- what do you think?

Question

I bought a substantial amount of CFC stock back when it was steady for about a week or so at 19-20. Well, not to happy about it now, but I'm willing to keep it in for a while until it gets back up on its feet. But I've decided to buy a whole lot more stock at the moment it begins a rise (hopefully what will turn out to be a steady rise). Do you think that's too much of the "putting all my eggs in one basket" type of thing? I mean, should I be remotely worried about Countrywide going down (even though BoA is buying them, which I don't think will help them overall too much)?? Thanks

Answer 1

I've enjoyed keeping about 5-10% of my portfolio set aside as a "flier fund"-longshot stuff that attracted my attention but is undeniably highly risky, and that's the only place I'd put Countrywide.

If I bought it. That said, they're focused on a bad part of the market, with a now very public contempt for their clients. I wouldn't touch it myself.

Answer 2

I don't think CFC has much potential.. especially since it might be bought out by BAC.  You will only receive 0.1822 shares of BAC per every CFC share you own... or just under $7 per share.

Answer 3

Did you figure out your risk tolerance abnd set up an asset allocation based on your risk tolerance? You start with an asset allocation...then you start buying products.

Unless this is play money you should not be in individual stock. It's way too risky and narrow. You need a lot of diversification.

Answer 4

What reasons did you have for buying CFC in the first place--Fundamental reasons, or technical? Do these reasons still exist? If those reasons are no longer there, then you should close this position, take your losses, and learn from this experience. This will make you a better trader/investor in the future.

If those reasons still exist, and price went down, how come I sense that you are not happy about it? Are you a fundamental investor, or a technical trader?

Adding to a losing position is not good. It's like throwing good money away. Wait until the market is in your favor, meaning your position is showing profit, then add to that position whenever price pulls back above your original entry price.

There are a lot of other good stocks out there that you can trade. If this one is not working out as expected, move on to the next trade.

Answer 5

All good advice.  I'm staying out of the financial sector for now.  Retail and investment banks are still restructuring from the credit crunch.  And we'll be seeing a new system of federal regulation in the financial sector.  So there are new factors to consider.  Unless you're an experienced investor and understand the banking system, I'd look elsewhere.  There are plenty of great stocks available.

A good rule of thumb, if you're a new or relatively new investor, you should increase your diversification to manage (i.e. own stocks in different industries or sectors).  Experienced investors can concentrate their money into fewer stocks.

Answer 6

CFC is awfully high risk.  I wouldn't put more money in there than  you were willing to lose.  If BoA rescinds their offer, which can happen, then CFC probably goes to $0.  Be careful.  Diversify.