Discussion in 'Stocks' started by krazykarl, Feb 6, 2006.

  1. so, it's looking like kerkorian will get his way :

    -cut dividend
    -reforms in the executive ranks
    -etc etc etc

    again, im a novice, but if they cut the divided, won't there be a good sell-off from funds that carry high-yield stocks?

    time to short?
  2. TylerSJI


    First of all, the community may have already discounted a possible dividend cut and if the cut doesn't infact come and you're short you could get hurt.

    Second, it's my humble opinion that this stock doesn't have too much more room fundamentally to fall. It's psr is only 0.07, around a dozen times lower than Toyota and Honda for comparison. Suppose that there is a 50% chance that GM turns this company around and has half the profit margin of those two companies. Risk-adjusted those two still have a premium of about 3x over GM (12 divided by 50% divided by 2 [for half the profit margin]. My point: I think its big fall is largely due to the endless bearish newsprint opinions/news and that there is a lot of smart money willing to pick it up if it gets much lower.

    On the chart alone though, it looks like a so-so short play to me. It rose fast towards the long-term downtrend moving average and has been turning back nicely over the last few days. On the negative side (in my opinion once more), it's not as high as I'd demand and the ever-important automobile index ($DJUSAU) is even closer to the mean of its downtrend.

    Good luck.