Would it be smart to buy some GM stock now that is has dropped so low?

Question

I am new to investing in stock market. I am just wondering if I should buy it now that it is so low and hope it rebounds in the next few months and sell high.

Answer 1

The key to investing is being independent.  Don’t listen to the 1 guy in the media who says that a stock is good/bad.  Do your own research and step back and look at your company...and then ask yourself why do you think that GM is worth more than they are trading at?  Trying to find the next big stock is a lot harder than finding a value stock that is trading very low but has potental to be much higher.  I have made a lot of money with this approach as well as ignoring the hype from the media during the hold stage.  The best time to buy a stock is when it’s hammered down (the uneducated media hates/starts rumors)...then the day the media jumps on the bandwagon with your stock is the day the idiots who listen the media buy your stock.  At the same time, you made money.  Usually by the time the media jumps on the bandwagon its too late to buy stock...I could name 200 reasons why I think GM is a good buy and because of this I have continued to buy every time it went lower knowing that in 2-3 years that’s all the more money im going to make.  I have road the ups and downs with GM for sometime and have continued to be happy.  It’s a lot easier for the 5th largest financial firm to go under then the largest auto manufacture for 100 consecutive years to go under (market share may be decreasing some here, but its gained overseas).  Bottom line, don’t invest what you cant loose because nothing is a guarantee...but at the same time do your own research and ignore 97% of the media.  I like investing in stocks the media hates because the media bases a lot of there articles on opinion - remember the media will publish anything to get readers.  Also understand the industry, what causes slight increases / decreases (incentives, consistently beat analyst expectations, etc).  Finally the best advice anyone can give you before you enter the market is to have patience….holding a long term stock doesn’t really matter if your stock went up 2% today and down 1% tomorrow.  Good luck.

Answer 2

The worst reason to buy a stock is because it has come down so much. On April 28th you could have bought GM at around $21.00.  At that point it was 50% below its October 2008 price..... a 50% discount.... biggest US car maker... it's gone down so much........  now it's down 50% from there.

Never buy because you "hope". That's gambling.  You want to "invest" for the right reasons. Read some books on investing and trading.... it will be well worth it.

Answer 3

Seriously, I would not consider it.  If you have money to invest, please select an investment with a better risk/reward ratio.  With GM, you have less than a 50-50 chance of making money.  Select something that gives you a better chance.  

Go to Yahoo! Finance and type in ticker GM.  Check out how much debt this company has.  You'll know what to do ... Good Luck!

Uppity Wench

Answer 4

Sure, buy some , but only the amount you can afford to lose. Also diversify with a company that will likely gain. Then if you lose on  GM you gain on the other and they offset.

Answer 5

This still has a huge inventories for gas-guzzling SUVs. They are going to keep losing marketshare for a long time.

They are betting on hydrogen fuel cell car which may come to market in 2020.

If you can afford to lock the money for 12 more years, buy GM now.

Answer 6

I'm not sure.  They've been showing huge net losses quarter over quarter, and their track record even over the past three years is not impressive.  I would advise you to call the company and ask them about what they are doing to increase sales turn the company around before I'd even take a look at the stock again.

Good luck.

Answer 7

You can try, and it may work, however remember that companies can fall to zero and just because they fell doesnt mean they will come back, just htink of Enron, or Bear Sterns. You fundamental thinking is correct but I wouldnt try it on a single stock, instead try bottom picking the financial sector throught the exchange traded fund, XLF. In this case you will be trading a basket of stocks and if one goes bancrupt you will still have other stocks that can increase in value and give you a profit.