3 Reasons to Sell Ford Today

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.

To see what the very best CAPS members are saying now about Ford, just click on over to Motley Fool CAPS and have a look.

More Foolishness:

The Motley Fool Stock Advisor service looks for companies with strong management poised to beat the market over the long haul. To see all the stocks that have helped Tom and David Gardner beat the market by 39 points on average, take a free 30-day trial.

Fool contributor Dave Mock makes sure he still gets his three glasses of water a day. He owns no shares of companies mentioned here. The Fool's disclosure policy doesn't bother with small talk or hints; it gets straight to the point.


Read/Post Comments (16) | Recommend This Article (15)

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 July 13, 2009, at 11:58 AM, broker1152 wrote:

    Dave what is your problem. You and your court jester cohorts at MF seem to be obsessed with destroying F. Or is it something more basic. like getting greased from the boys touting GM.

  • Report this Comment On July 13, 2009, at 12:01 PM, UralBas wrote:

    You keep this up, SEC might be wondering why you keep on trying to do it.

  • Report this Comment On July 13, 2009, at 12:11 PM, Fool wrote:

    your prediction was wrong before and is wrong now

  • Report this Comment On July 13, 2009, at 12:25 PM, MisterBruce wrote:

    What could possibly possess you to write this? Plucking out common bullish rationale? I would be willing to bet that you drive a Korean car and shop at Wallmart. You seem awfully proud of your 27% return. Guess what I'm at 75% for this year alone. If you want to sell your F stock. . . I'll buy them from you, fool.

  • Report this Comment On July 13, 2009, at 12:30 PM, bchrobuck wrote:

    How, knowing so little can you profess to know so much about a business you do not understand??

  • Report this Comment On July 13, 2009, at 1:14 PM, jclarkrep wrote:

    YOU ARE QUITE CORRECT THAT AS A RESULT OF ESTABLISHING 60% OWNERSHIP OF GM, THE GOVERNMENT CAN NOW BACK ITS INVESTMENT WITH PUBLIC FUNDS. THIS IS CALLED SOCIALSIM. MOST AMERICANS DO NOT EMBRACE THE IDEA OF OUR FREE ENTERPRISE SYSTEM EVOLVING INTO SOCIALISM. EVERYONE I KNOW, AND MYSELF INCLUDED, VOWS TO NEVER BUY ANOTHER GM PRODUCT AS LONG AS THE GOVERNMENT OWNS IT. DID YOU FACTOR THAT INTO YOUR PATHETIC RATIONALE?

  • Report this Comment On July 13, 2009, at 1:38 PM, kriswone wrote:

    jclarkrep is 100% correct.

    MF Fool is 100% trying to opinionize people instead of informing them.

    Do some research, ANY research, and you will see Ford is the company to invest in.

    DO THE RESEARCH, QUIT SHOWING OPINIONS.

  • Report this Comment On July 13, 2009, at 3:06 PM, tuckeroso wrote:

    Dave, you are trying to manipulate public opinion and in-turn manipulate the market. I hope it bites you in the hind end. If people are foolish enough to listen to you- more power to you. I know there are a lot of foolish people out there. Hopefully, most people will consider the facts and think for themselves.

  • Report this Comment On July 13, 2009, at 7:14 PM, kokomojo1066 wrote:

    Obviously you guys have not read MF's "Three reasons to buy Ford today."

    Read it, then check your outrage at the door.... I'm planning to add F at budget price to go with the shares I own from the old days. Thanks, Dave. You done good.

  • Report this Comment On July 13, 2009, at 7:18 PM, kokomojo1066 wrote:

    PS

    The govt. ownership of GM is closer to nationalization than it is to socialism.

    Nationalization is usually used to protect the interests of the public. Not that I'm in favor of GM getting my tax dollars, but I think of what might happen if we let the weak one fail.....could bring collapse of the whole economy. It's bad enough now, right?

    Now let's contact our legislators and tell them we need anti-monopoly legislation.

  • Report this Comment On July 13, 2009, at 7:19 PM, kokomojo1066 wrote:

    Sorry typo. weak ones, I meant. Cars, banks, brokerage firms, whatever.......

  • Report this Comment On July 13, 2009, at 7:22 PM, broker1152 wrote:

    JCLARKREP IS CORRECT IN HIS ASESSMENT OF THE COMMENTARY. BUT THE REASON FOR IT IS THIS... DAVE AND HIS SOCALIST COHORTS TURNED THEIR BACKS ON THE AMERICAN SPIRIT,WHICH BY THE WAY IS ALIVE AND WELL AT F. THOSE OFUS WHO BELIEVE IN THE LEGACY OF THE COMPANY AND WHAT IT HAS MEANT TO AMERICA HAVE BEEN REWARDED. THEY UNDERSTAND THAT COMPANY IS SOLID, THEY WANT THE PRICE TO RETREAT SO THEY CAN RECAPTURE THE GAINS THEY MISSED, BECAUSE THEY ARE ONE TRICK PONY, INCULCATED, SOCIALIST SYCOPHANTS

  • Report this Comment On July 13, 2009, at 8:11 PM, broker1152 wrote:

    Yes, kokomojo, or should I say "koko come lately." This is not their first assault on F. We all saw 3 Reasons To Buy Ford. That is called, having the appearance of being impartial. It's a cover in the event of an inguiry by the SEC. We don't need to dismantle the company, just because people like you want to increase their stake. Carry on like the big boys, and buy in the dips. The 5 year outlook on the stock is 20+ .Lots of room for upside. In at 1.66 was sweet though. Take care.

  • Report this Comment On July 13, 2009, at 8:40 PM, MisterBruce wrote:

    3 Reasons to never read another article by Dave Mock, or any comments posted by kokomojo.

    Wrong kokojaw—read both. You miss the point. Why pick on F? why didn't he consider one of his own little darling picks. And why was the other (buy) article conveniently missing from Google news feed?

    Reason 1: I disagree with you.

    Reason 2: I disagree with you.

    Reason 3: I disagree with you.

    I accept your apology.

  • Report this Comment On July 22, 2009, at 12:47 PM, UralBas wrote:

    Wow... if we followed your recommendation given today's prices.....were would we be.... hating the fact that we were fools enough to follow it..... well. its only 9 days ago and the market thought otherwise. A year from now will really tell where were going.

  • Report this Comment On July 22, 2009, at 12:51 PM, UralBas wrote:

    Just by not listening to such a recommendation

    Anyone that stayed with F since the day you stated this (F was at 5.6 and today at 6.38 Jul 22 2009) would have made at 13% profit....

    Can you please make a comment?

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