Do you think my uncle is thinking clearly on wanting to buy stock in GM?

Question

I wouldn't buy anything related to an American car company.. but what are your thoughts?

Answer 1

It depends on what he views as a good buy.  As long as he is consist ant in his trading/investing he is half way there.

http://www.stocks-simplified.com

Answer 2

They say its good to buy stock at low price since it can only go up from there if there are prospects of the company restructuring. GM will not go away. It provides jobs for thousands of Americans and even govt will support it. We need to continue to support American made as much as possible!

Answer 3

Your uncle may be thinking logically and clearly.  But if he doesn't know much about the risks of investing.  Then his clear thinking will likely make him loose money.

Some people approach investing with the same mind-set as they would approach gambling.  And it's pretty hard to persuade somebody like that to change his mind.  Because he doesn't care about any information you might have for him.  Information is irrelevant for someone who is relying on luck for his success.

Answer 4

That's why he should buy... everybody is down on them and the expectations are terribly low.  If... no, when they turn it around, it will be a good stock to have bought at its low.

Answer 5

it's a risk i know that.

however, there could be big$$$$ if things go right for them or ford.

in one weeks time ford and gm went up over 30%

EDIT- 07-22-2008 if your uncle bought stock yesterday, GM closed up 9.4% today. good buy.

Answer 6

Last week, before the bank rise floated all boats...? Yes.  The 40% increase was something to behold, and with the drop in oil prices, quite reactive. Profits should be taken.

At the present time?  Absolutely not.  They will suffer more heavy losses before straightening out - a process that will take years.

If he is looking at it for a trade, it has potential, but very little compared to other better opportunities, as long as he has close stops in place to protect against loss.

Answer 7

With the purchase of any stock there are pro's and con's in the purchase.  Yes, GM is low in terms of stock price, but the US auto industry has been in trouble before.  In the 1970's Chrysler was bailed out by the gov't when they had problems because it was reasoned that one of the "Big 3" auto-makers was too big to fail.  Chryslers stock went from $7 to $35 in a few short months.  Chysler was also the maker of the Army's M1-Abrams tank which helped the govt's decision.

With the dollar being weak against the Euro, European cars become increasingly more expensive.  So people that will buy cars, and we are a nation of car buyers, might have to look at the domestic brands until the dollar rebounds.  

You seem young and have little faith in the ability of the United States to rebound.  The economy is cyclical, as much as our elected officials fail to realize or refuse to admit.  While this stretch of time might seem as bad as it has ever been, it isn't.

I would never put my last dollar in any investment, and diversity is important.  If this is money that your uncle can afford to tie up for a while and if his reasoning is "sound", there is no reason not to allow him to make an investment.

Your uncle does need to realize that there are no guarantees in life or the stock market.