5 Stocks You Should Avoid Right Now

Editor's note: Contrary to reporting in a previous version of this article, Ford has accepted no bailout money from the federal government. The Fool regrets the error.

A few weeks ago, we profiled five unbelievably solid stocks -- companies that have been paying uninterrupted dividends to shareholders for more than 45 years. That consistency is incredible.

Today, we thought we'd take the flip side of that coin and examine five stocks that are anything but incredible.

Why they are so dangerous
What first caught our eye about these five dogs is that they are five of the six most heavily traded stocks on our major exchanges:

Company

Average Daily Trading Volume, Last 3 Months

Recent Share Price

Citigroup (NYSE: C  )

48.1 million

$2.85

Bank of America (NYSE: BAC  )

43.7 million

$7.60

Ford (NYSE: F  )

40.8 million

$3.25

General Electric (NYSE: GE  )

29.7 million

$10.94

Fannie Mae (NYSE: FNM  )

29.4 million

$0.70

General Motors (NYSE: GM  )

27.2 million

$2.10

Source: Capital IQ, a division of Standard & Poor's.

Millions upon millions of these shares have traded hands -- on a daily basis -- over the past three months. That might make sense; after all, every one of these stocks has headlined the nightly news at least once during that time period.

Now, we have to acknowledge that many of these transactions were from the big-money institutions or the short-term day-trading crowd. But somewhere in there is the little guy.

And you should stay away
Of the six most heavily traded stocks, we believe you should avoid five of them outright:

  • Citigroup
  • Bank of America
  • Ford
  • Fannie Mae
  • General Motors

Why? Because these five stocks have three troubling commonalities:

1. Convoluted relationship with the government.
According to the Center for Responsive Politics, the "Finance, Insurance, and Real Estate" industry spent more than $3.4 billion on lobbyists between 1998 and 2008 -- more than any other industry. Over that same time span, General Motors and Ford "donated" nearly $200 million to Washington.

What did those five companies get for all of those political contributions? All but Ford have received well-publicized bailout funds. And while the taxpayer money will be used to save these companies from a far worse fate (we hope), Uncle Sam's money comes with strings attached.

Under normal circumstances, businesses are accountable to three constituencies: their customers, shareholders, and employees. Businesses will do well when they do right by all of them. These five companies, however, are now accountable to a supra-constituency: the federal government. That frightens us, because it's unclear how customers, shareholders, and employees will fare when these companies try to do right by the feds.

2. Gordian knot-like financials.
Take a look at Citigroup's balance sheet. For all of the information, for all of the numbers, it's among the most confusing documents we've ever examined. Call us when you figure out what it owns and what it owes. Heck, call Citi CEO Vikram Pandit first. He may benefit from the knowledge.

See, it's seemed to us that as the credit crisis persists, insiders haven't been totally clear about what's on their books. Though some have a vague sense that mark-to-market accounting has forced them to write down asset values too far, only time will tell ... and time may not be on these firms' sides right now.

The auto companies have some of these same issues -- they have consumer finance/lending divisions -- but their pension obligations present an entirely different yet similarly complicated set of problems.

3. No near-term catalysts.
The financial companies will survive in some form -- our government has committed to that. But their future will be unlike their past. Regulation will be stricter. The massive 30-plus-times leverage that drove outperformance earlier this decade will be a dark relic of a bygone era. And now, skeptical investors may never ascribe the same market multiple to profits.

We just can't see a world in which these companies post the same kind of profits that we saw for the past 10 to 15 years.

But wait, I count six ...
GE is the sixth company on that list, and it faces some of the same issues mentioned above. In fact, GE lost its AAA credit rating earlier this month for the first time in 40 years.

Yet we're hesitant to write GE off, because GE is a massive conglomerate that owns a collection of diverse and cash-generating operating businesses. As a result, its balance sheet is in better shape than some others, and its recent deal with Berkshire Hathaway shows that the company can tap resources that smaller, more troubled names cannot.

So we're taking a wait-and-see attitude here. That may not be a satisfying answer for anyone looking to buy GE, but remember Warren Buffett's observation that there are no "called strikes" in investing.

What you shouldn't avoid right now
Contrast the future of Citigroup or General Motors with, say, the future of Apple (Nasdaq: AAPL  ) . Apple was recently named the "World's Most Admired Company" by Fortune. It hasn't received any TARP money from the government; even better, as of the end of 2008, Apple had more than $25 billion in cash and short-term investments ... with zero debt.

That means the company has a bulletproof financial position and can continue with business as usual -- snazzy marketing and innovating new products -- while competitors are spending their time figuring out ways just to survive.

This isn't to say that Apple doesn't face challenges. It's tricky to be in a business where you need to keep pace with rapid development cycles. But at least Apple isn't encumbered by convoluted relationships with the government and convoluted financials.

Buy one-foot bars
There's value in a company like GE. Heck, there may even be value in one or all five of the stocks we've advised you to avoid. But given their complexity, they're the proverbial "seven-foot bars" that Warren Buffett says he avoids in investing. (Remember, Berkshire got a 10% dividend on those preferred shares it bought from GE -- shares that are far more interesting to us than the common stock.)

Instead, Buffett looks for "one-foot bars that I can step over." In other words, lay-ups, short putts, or fastballs down the middle (to diversify our sports analogy). These are easy investments where the reward profile far outweighs the risk profile.

Fool co-founder David Gardner believes Apple represents just such an opportunity today, and he and his brother Tom have found all sorts of similar opportunities for their Motley Fool Stock Advisor subscribers. That, after all, is the silver lining of a down market, and if you're prepared to be a long-term investor, you can take advantage.

Click here to join Stock Advisor free for 30 days and enjoy immediate access to all of David and Tom's proprietary research. There is no obligation to subscribe.

Already subscribe to Stock Advisor? Log in at the top of this page.

Brian Richards does not own shares of any companies mentioned. Tim Hanson owns shares of Berkshire Hathaway. Apple and Berkshire Hathaway are Motley Fool Stock Advisor recommendations. Berkshire is also an Inside Value pick and Motley Fool holding. The Motley Fool has a disclosure policy.


Read/Post Comments (80) | Recommend This Article (165)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 09, 2009, at 2:33 PM, rickgray2 wrote:

    Correct me if I'm wrong...You said that all of the stocks you recommended to stay away from received well- publicized bail-out funds. As far as I know, Ford was not one of them.

  • Report this Comment On April 09, 2009, at 2:36 PM, RockOFellow wrote:

    This is a Foolish article.

  • Report this Comment On April 09, 2009, at 2:38 PM, RockOFellow wrote:

    Do your home work Brian Richards and Tim Hanson...

  • Report this Comment On April 09, 2009, at 2:41 PM, yourmomanddem wrote:

    Come on man and get the story straight!!! Ford did not and will not take money from Uncle Sam. Every time people talk about the auto Ind. you reporters want to throw Ford under the bus. Research your info before writing about it!

  • Report this Comment On April 09, 2009, at 2:50 PM, LMAO4reals wrote:

    Have you seen the movement in BAC today? LOL, all the shorts have been slaughtered and decimated. Your article is a bit late, but don't let that keep you from shorting more shares. LOL!!!!!!!!!!!!!!!!!!!!!!!!!

  • Report this Comment On April 09, 2009, at 2:52 PM, Shopessmart wrote:

    Utter garbage.

    First, let's post some facts, which are verifiable:

    1.) Not millions upon millions of shares have been traded on these positions, rather 10's of billions in weeks, not months and I am not even counting options activity. You two clowns missed that estimate by a few zeroes.

    2.) No near term catalysts; Ummm check your earnings calendar. Last I checked, earnings are catalysts or perhaps you missed WFC's "non-catalyst" from this morning.

    Warren Buffet, for whom I have complete respect and admiration for has been on a bit of a tear to the wrong side lately. Though I am sure that he will recover from recent downgrades and ultimately post better returns over the next ten years than most investors or the "name dropping" authors of this POS blog, I am not sure that all of his whiticisms and quotes are designed as "laws" versus guidances.

    C, F, and GM and BAC are definately plays and "playable" here at these prices. Chart C for instance..strong resistance at $3.05. A break above that and $4 is a foredrawn conclusion. A stop at $2.90 after a buy at $3.00 in hopes that it plays above $3.05 could be the next best move. Heck, a real risk taker could even lower that stop to $2.64(stop out at $2.55 and buy more if the shares swoon lower ahead of what is sure to be elevated earnings expectations while looking for some quick gains understanding that it is not a good idea to marry this play.

    F? Ford is the Detroit winner...with shares up over 300% from their 52 week lows and the clear reason why already behind us yet not priced in. F could nearly double again and rise to +7.00 during the balance of this year.

    BAC? Jeesh, you would think that the prospect of Ken Lewis leaving, earnings, and stress testing would be viewed as catalysts.

    GM is doing everything it can to modify contracts with UAW and dealings with bondholders. If they stay out of BK it will be a victory in the eyes of the consumer. They will buy more of their heavilly discounted vehicles as costs of credit to the best of breed buyer are at 0%.

    No comments on FNM because I think you simply just threw them into the mix to be right with all of the others who were right long before you...nice coat-tail riding though...it should be a sport for which you two would medal in.

    Why not just check some facts before writing? Short much?

    You two are no better than the throngs and masses on any chat board bashing a stock or sector without any channel checks or fact checking.

    Oh and lastly, why burden us with contacting Vikram Pandit? Why not forward your drivel to them or better yet, hand deliver it so you can experience first hand what being laughed out of a building feels like then come in here, loaded with facts and tell us all about it.

    Sincerely,

    Ash

  • Report this Comment On April 09, 2009, at 2:52 PM, dkmiles wrote:

    The main reason why Ford specifically has been rallying lately is because A) They DIDN'T take any Federal bailout funds B) They've cut their debt dramatically C) They've renegotiated their contracts with the unions to make them more competitive with the foreign guys and D) Have reiterated their cash position.

    Bottom line is Alan Mullally is a leader who is truly turning Ford around. If the economy were sound, this would be a $40 stock... Their product pipeline is exciting and they're getting innovative with design. A little history on Mullally, this is the guy who was responsible for the 777 at Boeing - he would have had the 787, but left before it took off, and you can see how Boeing has performed with the 787 since he left (2 year delays, supply chain problems, etc.) Don't underestimate the value of leadership.

  • Report this Comment On April 09, 2009, at 3:03 PM, dlpfrench wrote:

    Change your name to the Motley dead head. BAC is a money machine. With the bad stuff wiped off the book. Fresh capital and a housing market that has dropped 40% plus in some markets mortgages will now be legit from people with good credit and will fly fast. Stay away from Citigroup but not BAC...weren't you the same morons that were trashing Wells Fargo recently. What good are you.

  • Report this Comment On April 09, 2009, at 3:04 PM, LMAO4reals wrote:

    One last thing in regards to Apple. A recent 1000 share purchase at its low would have yielded a near 42k gain at its current level. The same amount of monies invested in BAC at its low would have yielded a gain of of 206k!!!!!!!

    Buy Apple????

    LOL, keep on shorting!!!!!!!!!!!!!!!

  • Report this Comment On April 09, 2009, at 3:21 PM, catoismymotor wrote:

    There are aspects to this write up that make me suspect it was the original April Fools day idea.

  • Report this Comment On April 09, 2009, at 3:23 PM, LMAO4reals wrote:

    Make that a 215k gain on BAC now as opposed to Apple's 42k gain !!!!!!!!!!

    Keep on losing those short positions on BAC!

    LOL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  • Report this Comment On April 09, 2009, at 3:42 PM, mipol13 wrote:

    are these guys smokin crack. you should'nt write if you don't have a clue!!!!

  • Report this Comment On April 09, 2009, at 4:08 PM, mikecart1 wrote:

    Worst article ever

  • Report this Comment On April 09, 2009, at 4:11 PM, SubC wrote:

    Tell me one thing, is AIG even made it to your list?

  • Report this Comment On April 09, 2009, at 4:28 PM, mcb212 wrote:

    This is an amazing article. I will use it to figure out what to BUY now....great insight and research. Jeez...where do these guys come up with this grade-school (and incorrect) analysis?

  • Report this Comment On April 09, 2009, at 4:35 PM, 12345joel6789 wrote:

    I hope no one takes this guy seriously but instead jumps at the opportunity in some of those stocks right now ,especially Ford Motor Company.

  • Report this Comment On April 09, 2009, at 4:48 PM, LMAO4reals wrote:

    Final Tally on 1000 shares invested in AAPL at low :

    $41,370 gain on Apple from 78.20 bottom to closing price today.

    Final Tally on same amount invested in BAC at low :

    $216,981 gain on Bank of America from 2.53 bottom to closing price today.

    Again, buy Apple instead of BAC ???

    LOL !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  • Report this Comment On April 09, 2009, at 5:08 PM, Ibeatmykids wrote:

    Surprised at how bad this article is.

  • Report this Comment On April 09, 2009, at 5:35 PM, Netteligent09 wrote:

    We would add the following companies to Stock to Avoid List: Netgear, Symmetricom, Atheros, Brocade, Marvell, KLA Tencor, Applied Materials, etc.

    Speculative, speculative, and speculative

  • Report this Comment On April 09, 2009, at 5:49 PM, DoWeUnderstand wrote:

    I do not view myself as contrarian, but I purchased last week Citigroup at 2.74, Ford at 3.16, GE at 10.97 and the only one I would consider really risky is GM and I purchased GM at 2:12.

    I do not agree at all with the views in this article. I think a lot of money can be made both short term and long term with these stocks. I put my money on it and am very comfortable with making a nice profit from these purchases. Frankly, I already have.

  • Report this Comment On April 09, 2009, at 6:06 PM, LMAO4reals wrote:

    8000 shares BAC @ 2.83

    3200 shares BAC @ 3.02

    2800 shares BAC @ 3.85

    1680 shares BAC @ 4.28

    I love BAC!!!!!!!!!!!!!!

    Then again, some FOOLS love eating APPLES !

    Keep on shorting BAC because you FOOLS keeps boosting my profits up !

    Happy Easter weekend BAC investors !

    LOL !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  • Report this Comment On April 09, 2009, at 6:10 PM, Ironbob wrote:

    INCREDIBLE! Thanks for the advice! I'm glad I'm ignoring it as I almost doubled my money on Ford in less than two months! I bought in at 1.82.

    What a retarded article. He takes a dump on Ford but offers almost NO real reason why except that they bought some lobbyists. Not whether the lobbying actually paid off for Ford, not why it's even an issue.

    GE may have lost their AAA credit rating but as of yet that hasn't had any real effect.

    Yeah Apple is the perfect company where the stock plunges if the CEO even farts loudly. It's also being besieged by competitors on every front of its business.

    It's not that it's a bad bet but with all that money generated how much have they paid out in dividends to shareholders? NONE. I mean seriously, even GE has bragging rights there.

    Fannie Mae and Citigroup? WOW, yeah thanks for the tip! I think even 5 year olds have this one figured out. Sorry but this article is just god-awful stupid with zero analysis and even plays a bad chicken little.

  • Report this Comment On April 09, 2009, at 6:24 PM, TimothyVR wrote:

    I would like to see some details as to why you think Bank of America and Ford are "dogs". Anyone who bought either one of them a few weeks ago would already have made a nice profit.

    You must have reasons as to why you assume the futures of these two under-valued companies are so bleak for share holders. Is the involvement of the government the only reason?

  • Report this Comment On April 09, 2009, at 6:56 PM, chopchop0 wrote:

    GE is solid and actually does something apart from its financial arm. People seem to forget that.

  • Report this Comment On April 09, 2009, at 7:33 PM, TexasTex wrote:

    "The Fool regrets the error." They apologize for the error regarding Ford and bailout money. What they should apologize for is the rest of this drivel!

  • Report this Comment On April 09, 2009, at 7:41 PM, Smartguy123456 wrote:

    Your nuts. I'm betting that banking will see another 20% rise next week. Citigroup (C) will be up 100%. Buy...Buy Buy. Large Hedge Funds are buying. Do you really think that Dick Parson's does not have an inside track with this administration. And oh btw, GS will be big on Apr 14th. You got it wrong..

  • Report this Comment On April 09, 2009, at 7:51 PM, cann211 wrote:

    It's not clear why "involvement" with the government is such a bad thing. I believe government "involvement" has made quite a few companies tick.

  • Report this Comment On April 09, 2009, at 10:36 PM, tuckyb wrote:

    You two 'fools' have just cemented my cancellation of your *premium* services next month!!

  • Report this Comment On April 09, 2009, at 11:35 PM, chiefanku wrote:

    for fools indeed

  • Report this Comment On April 10, 2009, at 1:19 AM, apanyakora wrote:

    Stock market is at its lowest point in history. Mr. writer, "IF THE HEAT IS TOO HIGH, GET OUT OF THE KITCHEN". Do not spread your view of doom to investors.

    Realistically, this is the moment to invest. Most stocks are trading at all-time discounted prices.

  • Report this Comment On April 10, 2009, at 1:57 AM, SNOOKYBABE wrote:

    WHY DO THESE "PEOPLE" EVEN SUBSCRIBE TO THE MOTLEY FOOL?!............THEY EVIDENTLY JUST CAN'T HELP BEING UNHELPFULL.......I BELIEVE IN FREE SPEECH, BUT JEEEEEZ......

    WHAT MEAN CRITICS......

  • Report this Comment On April 10, 2009, at 3:00 AM, Notfooled1 wrote:

    "These people" are trying to save you and the other fools from following bad advice.

  • Report this Comment On April 10, 2009, at 5:42 AM, wuff3t wrote:

    DoWeUnderstand - can you elaborate? Why do you think the companies you've bought into are good prospects for the short and long term?

    Thanks.

  • Report this Comment On April 10, 2009, at 8:35 AM, multi007 wrote:

    LMAO4Realz - I Second your post! BAC have been very nice to me. VERY VERY NICE. After yesterday's pop - even better!

  • Report this Comment On April 10, 2009, at 10:41 AM, vapoly01 wrote:

    Folks,

    BAC's vs. Apple's return over the past few weeks is completely irrelevant with regard to the authors' point.

    They are merely pointing out that BAC has much more debt and is still a very risky investment in comparison.

    I hope your "investments" in BAC continue to work out for you.

  • Report this Comment On April 10, 2009, at 11:17 AM, jesse2159 wrote:

    Now that the mark-to-market rule has been eliminated, everything can look good. My 1999 Ford Expedition could fetch a value of $50,000 but that's not what anyone not curretly institutionalized would pay. Now that banks don't have to simply ignore true valuations of their toxic assets, they can value them at any price they "think" it could fetch,..... at some time in the future. Then again, anyone who wants to pay me $50,000 for my truck would be more than welcome, and, if you act now, I'll throw in a pair of fuzzy dice.

  • Report this Comment On April 10, 2009, at 3:05 PM, Mactalon wrote:

    I think ya'll aren't taking his point right. His point was that investors shouldn't make such risky moves-- sure, high risk = high reward (generally), but I think the author's intent was to purvey the fact that safer options like AAPL would be better.

  • Report this Comment On April 10, 2009, at 9:56 PM, DoWeUnderstand wrote:

    wuff3t

    Research each one of these and then try to draw a conclusion of who will be here in 24 months. When I look at the historical highs of Citigroup for the last 12 months it is 27.35, GE it is 38.03, Ford is 8.79 and GM is 24.24. I do not believe the Citigroup will not be here or Ford or GE. I do think GM will make it but they are the one company that has the highest risk because change has been much too hard for them over the last 20 years. Since the President is gone and much of the Board is going then there is hope that effective change will take place to make GM a successful company. I just do not believe after some in depth analysis that these companies will not make it through this recession and become very profitable. This article from Motley Fools is totally wrong in my humble opinion.

  • Report this Comment On April 10, 2009, at 10:26 PM, szkandy wrote:

    Ford maybe is not so bad, my blog has so many articles about stocks, welcome: http://top5stocks.blogspot.com

  • Report this Comment On April 11, 2009, at 12:49 PM, texastar1 wrote:

    Brian & Tim, I'm a new subscriber to Stock Advisor...I'm disappointed about your article which has not been updated with recent events. I bought BAC, JPM, C, and WFC at real low levels a few weeks ago and got out on Thursday after Wells posted record earnings...been my best return ever in over a year...you need to stay on top of the news folks!

  • Report this Comment On April 11, 2009, at 1:20 PM, LMAO4reals wrote:

    Not only was this article ill timed, but making BAC inclusive within your group of "stocks to avoid" totally undermines the plausibility factor. BAC has outperformed throughout financial history and due to 1 acquisition (that in the short term seems bad) out of dozens of good acquisitions throughout the past 2 decades, you're ready to throw it under the rug. To top it all off, you try to persuade readers to buy AAPL. A stock that has a extremely high P/E ratio "priced to perfection" premium of 23 trading much higher than all its peers in the group. HPQ trades at 9. DELL trades at 10. IBM trades at 11. If AAPL has so much as 1 quarter not beating the street estimates (which AAPL is so well known and notoriously undercuts each earning calls to make it look like they beat every successive quarter), the stock price will come tumbling down from the heavens to Earthbound levels. I've seen the likes of AAPL back a decade ago, when DELL was the APPL of the era. Remember YHOO and EBAY back at the highs? What happened to that price target of 300 for AAPL? LOL!!!!!! As far as APPL holding 25 billion cash, let me inform you that BAC is holding 20 billion more than AAPL in cash reserves right now for the mere fact that "just in case" the economy get worse, they will be well prepared to deal with the downfall. AAPL has "never" given their shareholders a dividend, but as soon as the economy and market gets back to normal operating levels and they allow BAC to return the TARP money in a lump sum, it will once again elevate their dividend back to the 64 cent per quarter level within a year or two while APPL is still sitting there with its 25 billion in cash hoarding it instead of sharing it with their shareholders. Notwithstanding the other stocks you are asking readers to avoid, but I'm sure they're better buys than APPL because their risk/reward ratio and price entry point is much more assessible to investors.

    Lastly, let me make the statement that BAC will more than likely return to 30 bucks a share "before" APPL ever sees the 200 mark again. Mark my words. For the time being, making a 1000 share purchase in APPL at its 52 week bottom as opposed to buying BAC (with the same amount of monies) at its 52 week bottom yields these results:

    $41,370 gain on Apple from 78.20 bottom to the closing price Thursday.

    $216,981 gain on Bank of America from 2.53 bottom to closing price Thursday.

    Buy Apple instead of BAC ?

    You can't even convince a kindergartener of your metrics.

    LOL !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  • Report this Comment On April 11, 2009, at 2:37 PM, manekin wrote:

    I am new at managing my own portfolio. I figured that

    if a highly trained stock broker and former bank manager! from Smith Barney could lose $300K of my money! I certainly couldn't do any worst!

    No offense, but following your articles make me drunk! they're like a guessing game? You get me going taking notes, etc. only to find out that at the

    end of the golden carrot you are dangling is another deal you are trying to sell! So, if you dont' join you dont' get the carrot, and, surprise, surprise if you sign up, you still dont' the carrot!

    Reference your article on Cloud Computing. As a novice, It really sounds like something I really need to get involved in. However, you disclose King #1 as Google, I am guessing at your writing game that King #2 is VM Ware? and I never found who King #3 is?

    just another sales pitch for freebees if you buy a membership to Rule Brakers which I already am a member! I dont' get it, why cant' you give straight answers and straight talk on information we are paying for? Why the cute little games of cat and mouse?

    based mostly

  • Report this Comment On April 12, 2009, at 9:32 AM, moerequity wrote:

    I agree with Manekin, I don't even read your articles any longer. There is no sound advice in there anywhere. I am a member, but when my time is up it's up. You guys have really abused your members--It's always look at this great stock BUT it may not be the one to buy today, BUT if you join up now you will get to see teh great stocks we picked. I am tired of it and pissed that I joined up.

    Moe

  • Report this Comment On April 13, 2009, at 10:52 AM, buildakicker wrote:

    Maybe the articles aren't always good, but the Stock Advisor is good advice. I am making money, not loosing it in this time of financial hardships by following their advice.

  • Report this Comment On April 13, 2009, at 12:44 PM, LMAO4reals wrote:

    Current Scoreboard:

    $41,990 gain on Apple from 78.20 bottom to current price.

    $242,018 gain on Bank of America from 2.53 bottom to current price.

    BAC gains nearly 6x the amount compared to AAPL !!!!!

    Buy AAPL instead of BAC ?

    LMAO !!!!!!!!!!!!!!!!!!!!!!!!!!!!

  • Report this Comment On April 13, 2009, at 12:55 PM, asimali1973 wrote:

    I know whatever they suggested eventually happened but sometimes with a delay. C & BAC are rallying only on hopes and increased almost 4 times from their bottom. There may be a huge sell off after their result once this bubble will burst.

    Those who will be able to sell early will be protected and late comers will suffer hardly.

  • Report this Comment On April 13, 2009, at 1:00 PM, mz59017 wrote:

    Yes indeed, this article has the same value as the Lehman stock price today....

  • Report this Comment On April 13, 2009, at 1:13 PM, LMAO4reals wrote:

    Even if BAC were to be cut in HALF from its current level, it would still be FAR ahead a better investment than buying shares in AAPL. BAC at 5.18 would still be a gain of 121,009 as opposed to APPL's current gain (3x the gain!!!!!!!)

    My 15,680 shares of BAC will one day in the not so distant future acquire dividend gains of 10,035.20 each quarter while APPL will still be holding onto 25 billion in cash to THEMSELVES hoarding their wealth without giving a piece of the pie to their shareholders.

    Invest in APPL instead of BAC ?????

    LOL LOL LOL !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  • Report this Comment On April 13, 2009, at 1:25 PM, LMAO4reals wrote:

    I welcome pessimism on BAC though. Please feel free to voice your negativity and be skeptical by shorting your entire capital on the corporation. My portfolio will be truly grateful for your input.

    LOL !!!!!!!!!!!!

  • Report this Comment On April 13, 2009, at 6:07 PM, LMAO4reals wrote:

    Final Tally on 1000 shares invested in AAPL at low :

    $42,020 gain on Apple from 78.20 bottom to closing price today.

    Final Tally on same amount invested in BAC at low :

    $262,418 gain on Bank of America from 2.53 bottom to closing price today.

    A gain of 650 on AAPL, while BAC gained 45,437 today.

    Again, buy Apple instead of BAC ???

    ROTFLMAO !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  • Report this Comment On April 13, 2009, at 6:10 PM, multi007 wrote:

    LMAO4reals - great BAC day today!

    LMWTTB - laughing my way to the bank!

  • Report this Comment On April 13, 2009, at 6:13 PM, LMAO4reals wrote:

    Of course you're banking with B of A right ?????

    Gotta help those depositories get fat !!!!

    LOL !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  • Report this Comment On April 13, 2009, at 6:34 PM, fcrc124 wrote:

    Come on...... Stay away from GE? Stay away from BAC?

    What are you guys thinking by saying that? I am not an expert but lets just ask 2 questions about these companies.

    Will they be around in the next 5 years? Are they really valued at what they are worth?

    BAC did not need the bailout money that was given to them but were asked to take it to not singe out any failing banks. They took the money and most of the debt they acquired was from Meryl Lynch which they bought with the bailout money. So will they be here in 5 years? Yes will they be worth way more then 7 dollars? Yes. Come on its times like these that they need to tell people to take advantage of an opportunity to get a way undervalued stock.

  • Report this Comment On April 14, 2009, at 1:27 AM, wreelp wrote:

    maybe a little less time getting massages and playing video games at work and a little more time researching would be very beneficial. This is a freshman level 2 page research paper at best. You Know NOTHING!

  • Report this Comment On April 14, 2009, at 9:44 AM, lazymutts3 wrote:

    AND YOU YOU SAID TO TO BUY YRCW, I DID AND SELLING I TODAY. IT WILL BE IN THE TANK BY THE FORTH QUARTER, IF IT LAST THAT LONG. SHOULD I BUY A NEWSPAPER NEXT. MAYBE GOLD WILL GO TO $10,000. GLAD I JUST TAKE YOU WITH A GRAIN OF SALT.I DO NOT NEED YOUR HELP TO LOOSE MY MONEY, AT LEAST I AM IN THE BLACK FOR THE LAST 30 YEARS, NO THANKS TO YOU.

  • Report this Comment On April 14, 2009, at 1:46 PM, midwestcore wrote:

    well,

    i got the free trial membership with motly and this article here has helped me decide if i want to become a paying member or not.

    nope.

    i don't think so. this article is so far from the truth its not funny. the creator of this article should not be playing with peoples minds like this as bad as the stock market is to figure out rite now. G.E. is going to be the best thing on the market you can buy rite now. they have plenty of money for whatever they need. and they will take advantage of the world financial problems rite now like they always have and buy up companies in money trouble all over the world. the only thing G.E. has done that the annalist don't like is they only made billions of dollars profit last year but made a few billion less than they made the year before. who cares if they don't make as much when the economy is messed up this bad. G.E. also has billions of dollars surplus in the employees pension fund they can borrow, interest free, any time they need it to buy out companies in trouble because they don't have enough operating money to get them through this recession. i know this is true because i use to work for them and that was one of the issues the union always threw in the companies face for not letting people retire at an early age like fords 30 and out deal.

    as far as the other companies mentioned, they are also a few good buys i see there. ford already said they do not need any government hand outs because they rearranged everything so they have plenty of money to get buy on now. the other companies mentioned are also steady rising since the market bottomed out.

    it sounds like some one is trying to scare people into selling these stocks so they can buy them themselves since they didn't buy them when they were almost free. well, good luck. i hope they keep going up and don't stop. sorry about your luck. if you want these stocks, just buy them at their currant prices. don't worry, you will still make lots of money at the price you can get them for now.

  • Report this Comment On April 14, 2009, at 2:28 PM, mm199691 wrote:

    Great article. For those critics of this article, you need to work on your reading comprehension skills. Maybe you need to read the article twice before you start shooting your mouth off. Those of you who want to gamble on the five of the six stocks discussed, go right ahead. Gambling is fun. I doubled my money on Citigroup ... but I realized it was gambling and not investing. Those of you whose CAPs scores are below Tim Hansen's at 95+ should realize that you are talking when you should be listening. Be quiet. Listen. Maybe you will learn something. Peace.

  • Report this Comment On April 14, 2009, at 5:09 PM, LMAO4reals wrote:

    No this wasn't a great article by any standard. The inclusion of such longtime main core holdings as BAC and GE as "stocks to avoid" begs to question the credibility of its content. Notwithstanding GM's and FNM's financial woes, I even believe that C and F will survive this historic financial crisis and I don't believe they should be included with the likes of GM and FNM. BAC and GE are strongholds that will be cemented in the financial markets long after even our grandchildren have come to pass. Just remember this article and your pessimistic thoughts in as little as 5 years from now and how you'll regret profusely for not INVESTING in these core holdings at this point in time. Even Citigroup inclusive. For the time being, the performance of these aforementioned stocks succinctly and concisely says it all:

    1000 shares purchased in APPL from bottom yields gain of 40,110.

    Conversely, same amount of monies invested from bottom in each of these 4 equities:

    BAC yields 233,672 gain

    GE yields 78,882 gain

    C yields 245,080 gain

    F yields 254,730 gain

    Clearly, AAPL is way UNDERPERFORMING all 4 stocks. Those that have comprehensive skills beyond kindergartener levels surely will see the light. Then again, some FOOLS will keep chomping away on APPLES and will soon find a worm in it as it falls down to Earth.

  • Report this Comment On April 14, 2009, at 5:15 PM, wldgrdnr wrote:

    One thing I can always count on....the FOOL to be a FOOL...your information is generally unsupported, and spreads misinformation...I think you only support stocks you are invested in....

    This is why I usually just hit delete when I get your emails

  • Report this Comment On April 14, 2009, at 6:00 PM, ThreeBulls wrote:

    Interesting how these comments are about the dismal recent past to the known present, but the advice given is for the present into an undefined future. The picture could be quite different. A few more surprises are in store.

  • Report this Comment On April 14, 2009, at 6:13 PM, multi007 wrote:

    LMAO4reals - Been a BAC account holder since they were NCNB!!

    What are your thoughts of DRYS (Baltic dry goods shipper) ? Im about to buy.

  • Report this Comment On April 14, 2009, at 7:00 PM, LMAO4reals wrote:

    Hello multi007. I've been tracking Dryships (DRYS) since August of 2008, but I've never actually bought shares of this company. After they lost contract after contract and then proceeded to drop their dividend the previous quarter, I dropped them from my tracking list. I considered buying shares of DRYS at the beginning of the year, but felt uncomfortable doing so. Unlike C, F, BAC, and GE, I feel that DRYS is an extremely speculative play at this time because the dry goods industry doesn't seem to have any good prospects in the near future. Additionally, DRYS's earnings growth is essentially flat for the next 2 years! If you want to play this speculative stock, I wouldn't buy chunk shares or you may risk a huge loss if bad news arises. Its float is near 20% short! Wow! Watch out below and if you must play, the 4 mark seems like the most safe entry point.

    Good luck and keep on holding onto those precious BAC shares !!!!!!!!!!!!!!!!!!!!!!

  • Report this Comment On April 14, 2009, at 7:51 PM, peters46 wrote:

    mm199691 - good comment. Most of them dopn't seem to be reading (or is it undetrstanding) the column. 'BAC didn't need the bailout', but took it to be a good citizen. Also, to be a good citizen they offered to take Merrill under their wing using that bailout money. BUT, oops, next week Merrill lost billions so BAC wouild have to infused with more bailout money before they could go thru with taking in Merrill. Taking in Merrill was part os the deal for getting the first bailout (that 'they didn't need'). I don't need a billion dollars, but if I could get it by promising to take care of a local failing company, I'd make that promise.

    The basis of the article is that each of the five (not GE) has assets that have unknown/unknowable value. But they are being valued at whatever the bank/co wants to value them at. Their book values are unknowable. People bought real estate at skyhigh prices believing the values would double or triple in a few short years. Lenders did not practice due diligence on the borrowers, and ended up with borrowers who could not afford yesterdays' prices or down payments. So when the borrower loses one of his jobs, what value does the lender place on the real estate? Still the skyhigh price? That price minus payments of principal? Neither of those - the borrower would have sold it.The price they could get in the market? No, that would mean carrying it on the books as a (large) loss. What values are BAC and Merrill putting on their assets? For most of their real assets (as opposed to derivatives) the only information they have is the remaining principal and the interest rate. If the original price (principal) was pie-in-the-sky, all they really have is hope. What value is their hope?

  • Report this Comment On April 14, 2009, at 9:42 PM, Kakabeka wrote:

    Hmmmm

    With all the vitriol in this article methinks

    tomorrow might be a dandy day to load up on some FAZ

    Anyone who trusts banks deserves the hell that coming down the tracks

    /by the way those tracks are owned by CNI

    (and THAT my friends is a keeper-

    reporting gigantic ACTUAL, not mythical, earnings on April 20 AMC.

    Metro (MRU-A.TO) is ALSO another sure thing reporting shortly....

  • Report this Comment On April 15, 2009, at 4:24 PM, LMAO4reals wrote:

    Roundup for today's market action :

    1000 shares purchased in APPL from bottom yields a total gain of 39,480 with a loss of -630 today.

    Comparatively, equal amount of monies invested from bottom in each of these 4 "stocks of avoid" equities yields these total results:

    BAC yields 244,491 with a gain of +10,818 today

    GE yields 83,250 with a gain of +4368 today

    C yields 241,855 with a loss of -3225 today

    F yields 233,600 with a loss of -21,130 today

    BAC returns more than 6x AAPL.

    GE returns more than 2x AAPL

    C returns more than 6x AAPL

    F returns near 6x AAPL

    Buy APPL instead of these 4 "stocks to avoid" in the equity market?

    LOL !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  • Report this Comment On April 15, 2009, at 4:39 PM, LMAO4reals wrote:

    Just for your perusal, even one of the forsaken doggy "stocks to avoid" FNM is OUTPERFORMING AAPL :

    FNM gains from bottom 156,400

    GM gains from bottom 38,176

    AAPL is BARELY outperforming (by 1,304 dollars) a company that nearly about to go bankrupt >>> GM.

    BUY AAPL?

    ROTFLMAO !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  • Report this Comment On April 15, 2009, at 6:12 PM, multi007 wrote:

    LMAO4reals - Thanks for the overview of DRYS! Looks like $4 is a good entry point. I put an order in now to buy 1000 shares at $4.50 and will buy another 1000 at $4 - ive been watching that 20% spread for the past few months. 20% per month is not bad...entry point here is key. This stock is a long term hold for me...

    Also just started looking at HIG. Im liking the insurance group but am very very cautious of HIG's commercial real estate holdings/defaults. I'll need to pull more research on them for a better idea of how they are with their debt right now. good talking to you.

  • Report this Comment On April 16, 2009, at 11:42 AM, riskyinvestor92 wrote:

    wow what foolish advice i have recently invested in bank of America and citigroup and GE and got back 40% of what i put in within 36 days. i you know what your doing then these can be good companies to invest in. Just because they are traded frequently dosent mean their going down, if your following the market you will know all of the companies mentioned have made a great increase in share price.

  • Report this Comment On April 17, 2009, at 1:00 PM, gslusher wrote:

    "Under normal circumstances, businesses are accountable to three constituencies: their customers, shareholders, and employees."

    Add in two others: their suppliers and the society in which they operate. It is the society, and the government, that provides much that businesses need to operate:

    - Stable political situation (e.g., no civil wars--try running a business in Somalia or Afghanistan)

    - Infrastructure (transportation, electrical power, communications, etc, much of which are provided by or subsidized by the society)

    - Protection (police, fire, military, etc)

    - Legal system (e.g., enforce contracts--unless you want to "enforce" them the way organized crime does)

    - Currency (try running Exxon on a barter system)

    - Environment--physical, social, etc (few corporations will, of their own accord, look to the broader impact of their operations beyond their immediate interests)

    etc.

  • Report this Comment On April 17, 2009, at 6:15 PM, msennett wrote:

    This is crap and very short-sighted. The reality is that Citigroup, for all it's pitfalls, is not going to fail. It can't.

    If it doesn't fail, eventually it will take off. When it takes off, do you want to have bought it at $3 per share or $15?

    Common guys. Put your analytical minds to bed and use some common sense. This is a 5 bagger waiting to happen.

  • Report this Comment On April 17, 2009, at 6:25 PM, tsfrancis1 wrote:

    I love this type of recommendation. It is obvious these companies all have major problems, but that is how you buy low and sell high. I have made good money on most of these names and this type of "avoid" recommendation is perfect for my investment.

  • Report this Comment On April 17, 2009, at 7:56 PM, vector242 wrote:

    Of course these stocks are risky as their past indicates dissonance with real macro-economy in a world of nominal returns leveraged to the hilt, as every share mentioned is of a corporation dependent directly upon capital and consumer loan stasis. Nevertheless, times are changing; collapse is subtext of change context. Past is prologue, but not necessarily consecutively; look for relevant sinusoid alternate phase differential similarity, say, going back 2 to 3 generations -- a reasonable analogy is odd-even address every other side of the street.

    Moving forward,, cash balance is a nice safety net; however, the trend is your friend, and I do believe that the great United States of America is going to be around for quite a while; the risk is whether the system will bank down production, which seems doubtful, given that very serious dominoes would likely fall thereafter. Every one of these corporations represents a seminal name in US corporate history, and a very successful one, too. The market is tending to stabilize at this point, as are at least two of the companies mentioned above, F and C. Indeed, F, with Bill Ford (the dedicated, sincere, intelligent great grandson of Henry Ford), Alan Mullaly (the incredible former CEO of Boeing Aircraft, and so far, worker of miracles with Ford), a product that is more than adequate with backup (regardless of low return) in rentals, taxis, police cars, light trucks; income stream change regarding line workers who purchase US makes, and now fading away yuppie staff dievestment bankers foreign marque acquisition, success so far with self-survival sans government money, competition in a past and recent very uneven playing field, now changing positively toward F, and potentially even GM.

    C is a tougher call; nevertheless, in the past and still, has the best and most comprehensive credit card outfit going. Furthermore, with reference to F, who are those jurisdictions gonna call overseas when the chickens hit the fan?!? Ghost busters?!? USA DOD, the greatest organization in the history of the world, has been protecting the dumpers forever; it is essentially unsustainable. The price of commodities has been and continues to climb, with short breaks -- small civil law countries with no direct access to commodities will find it hard to compete in a world moving toward innovation and real production (though slower nominal market level increase, nevertheless, lower VIX and more stable real growth) and away from re-design and consumption. It is context and overall real socioeconomic investment, NOT nominal market (after all, it did decide); the old cycle is inefficient and obsolete.

    Cash is great, but taking a shot is better, particularly in the case of F; from $1.70/sh close on Fr, 6 March, to today's (Fr, 17 April) close of $4.00, it has obviously done exceedingly well. Furthermore, its lows have been closing the gap with lows on the DJIA and SPX, though that has dimished in the last few days. It closed at $4.00 on approximately 53m sh traded, 2m less than the average, and less than on recent up days. It is a somewhat tough call near term, but it is doubtful that it will fade siginificantly on profit taking; support levels appear reasonably strong. All business is risky, particularly small business; that is the American way. You don't gamble, you take a very calculated risk and perform due diligence; the parameters represent a positive harmonic at this point in the cycle, particularly in context (continued text, not text, as in the past).

    Apple is a great product, too, still good buy, especially on dips. Software/hardware drivers high quality and innovation possibilities on their platform as well as resistance to virus attack far outstrip MSFT (the dievestment bankers' IBM selectric hooked up to a flatscreen).

  • Report this Comment On April 20, 2009, at 1:41 PM, TMFMmbop wrote:

    Are you guys going to give us a BAC update today? Sorry. Couldn't resist.

    Tim

  • Report this Comment On April 20, 2009, at 1:42 PM, TMFJoeInvestor wrote:

    ROTFLMAO !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  • Report this Comment On April 20, 2009, at 4:40 PM, LMAO4reals wrote:

    Of course you'll still get an update!

    AAPL 1000 shares purchased from bottom compared to closing price today >>>>

    $ 42,300 gain

    BAC (same amount of monies invested at bottom) as of today's closing price >>>>

    $ 169,691 gain !!!!!!!!!!!!!!!!!!

    Still more than 4x AAPL's gain !!!!!!!!!!!!!

    Don't let that keep you pessimists from SHORTING all of your capital on BAC though. After today's selloff, it'll be due for a bounce as soon as tomorrow. Additionally, it would seem that good news is baked into all stocks that have run up significantly, so you harecore APPLE eaters had better take your gains or you'll end up with only a worm !!!!!!!!!!!!

    ROTFLMAO !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  • Report this Comment On April 21, 2009, at 11:12 AM, a46 wrote:

    You´ve been quiet erroneous lately. What´s going on.

  • Report this Comment On April 21, 2009, at 1:09 PM, LMAO4reals wrote:

    You should check out his erroneous other *winners* LOL >>>

    CFX, IRS, USHS, CX, WTI, ERTS among others that have lost more than 50% of their value.

    On a different note, BTW thanks very much for all the HEAVY SHORT COVERING on BAC !!!! If it weren't for you pessimistic SHORTERS losing your SHORTS, us optimists on BAC wouldn't have such nice gains !!!!!!!!!!

    Picked up a nice DT @ 7.18 w 5000 shares and pocketed a nice gain @ 8.63 today. Still keeping all of my original shares bought between hit prices of 2.83 to 4.28.

    Current update >>>

    AAPL gains 1,200

    BAC gains 19,163

    Buy AAPL instead of BAC ?????

    ROTFLMAOATW !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  • Report this Comment On April 21, 2009, at 7:18 PM, LMAO4reals wrote:

    Final Tally for 4/21 market session >>>

    1000 shares purchased of AAPL comparisons to the "stocks to avoid" from their respective bottoms :

    AAPL gains 1,260 with total gains of 43,560

    BAC gains 22,873 with total gains of 192,564

    GE gains 4,777 with total gains of 81,475

    C gains 24,186 with total gains of 183,004

    F gains 8,517 with total gains of 208,275

    FNM gains 26,067 with total gains of 143,367

    GM gains 2,463 with total gains of 26,477

    Don't worry, AAPL is still doing a little bit better than GM (a company about to go bankrupt).

    BUY AAPL instead of the other 5 aforementioned "stocks to avoid" you say ???

    ROTFLMAO !!!!!!!!!!!!!!!!!!!!!!

  • Report this Comment On April 27, 2009, at 11:05 PM, rockwood77 wrote:

    Come on people.....Why do you think they call themselves "Motley Fool?".....The joke is on us!...My 5 year old Grandson can pick better stocks! These people have the brain power of a Tse-Tse Fly!

  • Report this Comment On August 22, 2009, at 1:52 PM, Billhagewman wrote:

    After reading all of this, I am reconsidering my subscription. I sure don't like the pick I just received.

    Bill Hageman

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 872160, ~/Articles/ArticleHandler.aspx, 12/22/2014 12:15:23 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement