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A shell-shocked economy, spiraling debt at financial institutions, or just plain bad management -- on any given day, investors can name a number of reasons to sell a stock. Yet while panic never helps investors, it's still a good idea to play devil's advocate with investments.
In Motley Fool CAPS, more than 135,000 members have weighed in on nearly 5,300 stocks, sharing bullish and bearish opinions alike.
Consider American automaking icon Ford (NYSE: F ) . The company has steered clear of bankruptcy, but in Motley Fool CAPS, a significant number of the 7,335 members weighing in on the company still offer reasons to be bearish. I've already plucked out some of the common bullish rationale backing Ford today, so here are three counterpoints, courtesy of CAPS:
1. High debt: Some CAPS members think Ford has too much debt and will have to resort to financing other than cash from operations to cover payments. In May, Ford joined a wide range of companies, from banks like Bank of America (NYSE: BAC ) to energy companies like Valero Energy (NYSE: VLO ) , in diluting shares. Ford restructured a chunk of debt in April and some investors predict it's likely to need more debt restructurings to get by.
2. Advantaged competition: Many investors anticipate that Ford will be at a disadvantage when a leaner General Motors emerges from bankruptcy without the weight of its bad assets. And while banks like Goldman Sachs (NYSE: GS ) and JPMorgan Chase simply paid back borrowed TARP funds to avoid government control, the new General Motors will be backed by a 61% ownership by the U.S. government, which could make it difficult to compete against, regardless of the government's improbable success in turning it around.
3. Falling sales: Falling auto industry sales have had far-reaching effects on manufacturers like Ford, Toyota (NYSE: TM ) , and Honda (NYSE: HMC ) as well as suppliers like Lear and Johnson Controls (NYSE: JCI ) . With sales continuing to decline in June, not many investors expect a quick rebound in the auto industry, regardless of predictions that the market has bottomed.
Of course, Ford has survived to date. But the need to consider questions about whether the company will ultimately thrive is why CAPS is such a great resource to augment your own analysis.