The ongoing financial turmoil and financial discussion thread

[metallicat]

Originally Posted by Table 5

Hmm, considering that I've heard the dividend might be gone if the US gov't helps them out, I'm not sure this is the time. Usually stocks take a tumble when the dividend is chopped.

However it might not be a bad time to look into companies that would benefit from bailouts indirectly. I've actually started looking into automotive companies that make carious parts for the car industry, but are not actually car companies themselves. One of them is Lear (LEA). They have been absolutely hammered this year, but apparently have already made some big preperations for the slow-down, so should be able to weather the storm. They make electrical parts and seats, something that shouldnt necessarily be affected too much if there is continued green-push in the car industry.

So what do you mean by dividend in this case? I am a true novice when it comes to stocks. With a government bailout, the stock isn't necessarily going to climb?

[Table 5]

Originally Posted by oilers_fan

So what do you mean by dividend in this case? I am a true novice when it comes to stocks. With a government bailout, the stock isn't necessarily going to climb?

A dividend is the money that a company pays you for owning a stock...just like the bank pays you interest in a savings account. Some companies have high dividends, some have low, some don't even have any! In essence the stock could remain level for years, but you would still be making some money because of the dividend.

Although you need to be careful with dividends. If they are too high, it's usually because the stock is doing poorly, and often means the company can't afford to pay out the dividend (and therefore will most likely slash it eventually).

If you listen to guys like Jim Cramer, a company like Linn Energy (LINE) is a great dividend play, because right now it pays you about 16%/year (which is known as the yield) just for owning stock. It's supposedly a pretty safe bet that they won't cut it either.

[Table 5]

Also, keep in mind I'm a graphic designer, not a financial planner. There are much more qualified people on this board to explain this stuff and get advice from.

[metallicat]

So then what happens to current shareholders? If a guy buys in at 3.30, and them they receive their bailout while cuttin the dividend, you wouldn't necessarily get back what you put in when you sell? Is that because they are essentially government owned or something?

[Table 5]

Originally Posted by oilers_fan

So then what happens to current shareholders? If a guy buys in at 3.30, and them they receive their bailout while cuttin the dividend, you wouldn't necessarily get back what you put in when you sell? Is that because they are essentially government owned or something?

Honestly, I'm not sure, it depends on the type of bailout.

I think GM is a pretty speculative play right now, I wouldnt pour all my money into it, that's for sure. If you want to put in money into a company that is really down but has a relatively safe future and will more than likely bounce back eventually, look into U.S Steel, GE, or Goldman Sachs.

[V]

Originally Posted by Table 5

Good for you, you're luckier than a lot of us. It sure as hell better not be coming from a government bailout though, as is the case with financials in the US.

Well, technically, my company is owned by the city, so...

[metallicat]

Just looking at the stock prices of some of these companies, it is unbelievable how far they've dropped.

[Bill Bumface]

Originally Posted by Table 5

Also, keep in mind I'm a graphic designer

Are you the guy from those Mac Vs PC commercials?

*cocks fist*

(Shut up fotze)

[Caged Great]

Originally Posted by hulkrogan

Are you the guy from those Mac Vs PC commercials?

*cocks in my fist*

Wow, I thought that I've heard of a lot of different fetishes before, but you are a totally different kind of freak there HR.

[Table 5]

Originally Posted by hulkrogan

Are you the guy from those Mac Vs PC commercials?

god, i sure hope not. i can't stand that guy.

[MoneyGuy]

A dividend is not something a company pays for owning a stock, like a savings account. A dividend is company profits that the company doesn't need for business purposes so the money is distributed back to shareholders, partly for tax reasons. Companies generally like to grow their dividends as it's a sign of corporate health. INvestors don't take kindly to not paying a dividend or cutting dividends, so companies try to avoid that at all costs. If you can find companies that have shown signs of growing their dividends and paying them without fail for many years, that's a very good sign. Dividends are taxed more efficiently than interest so it's quite tax efficient. When choosing stocks or stock funds, look for dividend payers as they generally outperform non-dividend paying companies.

[Table 5]

See, I knew a pro could explain it better than me.

[Phanuthier]

IIRC companies who don't offer dividend or low dividend tend to be more aggressive in their operations too, don't they?

Also, looks like DHL is cutting their US operations and mass layoffs (I believe approx 100,000 jobs) lost in Ohio.

[Slava]

Originally Posted by Phanuthier

IIRC companies who don't offer dividend or low dividend tend to be more aggressive in their operations too, don't they?

Also, looks like DHL is cutting their US operations and mass layoffs (I believe approx 100,000 jobs) lost in Ohio.

Well the dividend is nice, but TBQH it depends on the organization. If the company is putting the money to better use (i.e. expansion or getting projects rolling along) then its money that could be better used by the companies instead of going out to the investors. Of course that is just my opinion, and is not a hard and fast rule by any stretch...in general a dividend is still a good thing to have.

[Phanuthier]

Originally Posted by Slava

Well the dividend is nice, but TBQH it depends on the organization. If the company is putting the money to better use (i.e. expansion or getting projects rolling along) then its money that could be better used by the companies instead of going out to the investors. Of course that is just my opinion, and is not a hard and fast rule by any stretch...in general a dividend is still a good thing to have.

Yeah, I know high-tech and biotech are two in particular that are a little more aggressive in reinvesting - I took a couple classes in project entrepreneurship and it talked about this. I like to have a portfolio of both, although the concept of 0% dividend still makes me a little uneasy, but it works.

Found this too,

http://business.timesonline.co.uk/to...cle5126880.ece
Rod Lache, the Deutsche analyst, cut his 12-month price target on GM to $0, bringing it down from $4, and issued a “sell” recommendation. GM’s shares slumped to $3.02 in early trading, their lowest level since 1946, although they edged up again to close at $3.30, down $1.06 on the day.
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Mr Lache said: “Even if GM succeeds in averting a bankruptcy, we believe that the company’s future path is likely to be bankruptcy-like.”

Thats really harsh, though I for one hope GM doesn't get a bail out. At some time, GM is going to die and they already got their 2nd chance in 2003. Just let it go already.

Table 5 - can you go more into detail about why you like LEA? I mean, their balance sheet looks really good against their market cap, but at the same time, I don't really know who their list of customers are nor is that public info; without that, its really tough to make future projects unless there is something I don't know.

[bluejays]

Originally Posted by Phanuthier

Mr Lache said: “Even if GM succeeds in averting a bankruptcy, we believe that the company’s future path is likely to be bankruptcy-like.”

Thats really harsh, though I for one hope GM doesn't get a bail out. At some time, GM is going to die and they already got their 2nd chance in 2003. Just let it go already.

Personally, I hope GM doesn't get the bailout either. The AIG bailout was necessary to prevent the economy from going to absolute poop. GM, while a huge company, is not on the same spectrum when it comes to it's importance to society as a whole. While it's really difficult to see good people lose their jobs, why the hell would a guy who sweeps the floor, get $25+ an hour? I see the need for unions in blue collar places, absolutely, but when management/union screw over one another out of greed, this thing was a long time coming. Besides, it's the private sector...the free market is what it is - survival of the fittest.

Boy, the markets this morning are taking a beating. Perhaps time to pick up some RIM finally.

[metallicat]

GM down 15% already this morning.

[Dan02]

Originally Posted by fleury

[hile it's really difficult to see good people lose their jobs, why the hell would a guy who sweeps the floor, get $25+ an hour? I see the need for unions in blue collar places, absolutely, but when management/union screw over one another out of greed, this thing was a long time coming.

no kidding, the unions have negotiated themselves such fat contracts the're going to take down the companies and be left with no jobs at all.

Looking at a article from last year

GM officials say the average reaches $39.68 an hour, including base pay, cost-of-living adjustments, night-shift premiums, overtime, holiday and vacation pay. Health-care, pension and other benefits average another $33.58 an hour, GM says

Compensation of basically over 70$ a hour for what most of the jobs, is flat out ridiculous and thats why none of the American auto makers are competitive and profitable and why I feel all 3 will eventually fail no matter how many bailouts the government tosses their way. Until they get their labour costs under control(read halfish) the outlook is very bleak for them.

Alot of employees are making 3 or 4 times what they would for the same job outside the big auto maters. Simply not sustainable.

They need to let these companies fail and hope that new ones emerge without the oppressive burden of the contracts that the UAW has negotiated.

[Table 5]

Originally Posted by Phanuthier

Table 5 - can you go more into detail about why you like LEA? I mean, their balance sheet looks really good against their market cap, but at the same time, I don't really know who their list of customers are nor is that public info; without that, its really tough to make future projects unless there is something I don't know.

Lear's customer's are basically all the major car companies in the world, including General Motors, Ford, BMW, Fiat, Chrysler, PSA, Volkswagen, Hyundai, Renault-Nissan, Daimler, Mazda, Toyota, Porsche and Honda. Its main competitor is Johnson Controls (JCI). Together, they account for 75% of the automobile seating business.

Obviously the car industry is suffering big-time right now, but from what I read, Lear will weather the storm (and the stock has already been hammered to 1.40 today, from a 52 week high in the mid 30s). As long as they can manage the downturn, and car's still require seats in the future, their business should pick up eventually.

[Table 5]

Originally Posted by fleury

GM, while a huge company, is not on the same spectrum when it comes to it's importance to society as a whole.

GM has 1.4 million employees. 3 million jobs will be lost if it takes Chrysler with it...

You seriously don't think that's "important to society" ?