Sunday, August 2, 2009

F

The cash for clunkers program seems that it will not be going away, so Ford will benefit greatly! With that being said, my gut tells me that Alan Mullaly is very happy and will probably be raising more cash soon. This again is what I would do if I was the CEO, in order to ensure cash, in case the cash burn rates increase. On this, I "speculate" that Ford will be going to do another equity offering or preferred share sale. If that is the case, I will participate in the offering (if this happens) or buy the preferred now because either way it should appreciate in value.
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2 comments:

  1. AnonymousAugust 2, 2009 at 4:35 PM

    RF -

    I have a question on portfolio sizing. How do you determine what % of your portfolio a particular stock deserves? For example, I followed you on EXM and noticed that was your top biggest position, but how do you know the exact % of portfolio to assign EXM? Also for sector allocation, what sectors would you overweight currently?

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  2. RFAugust 2, 2009 at 8:12 PM

    Great questiion. I don't know your skill level but if you are medium to low in skill, I would and your port is over $100k, a position should not exceed 7%. However, if you are advanced and know option hedging, I have put over 50% of my portfolio in a stock before. If you have under $2,000 it's difficult to be diversified, so you really need to own 1 or 2 stocks...max 3 because of commission. Bank of America offers free commission tho, if you have over $25k in all of your accounts combined. Interactive broker is another good broker that is very cheap too. Anyways, as for position holding, it really depends on what I think the stock is going to do (return wise) and the risk associated with it. EXM at $5.90 was a steal and I know they company, so I knew the potential it had. The downside on stock was $3-4 and I saw $9-12 on the upside. Implied volatility is a good measure of risk but the important thing is to know the research. If you need on research, let me know. Plus the new blog will have a fee based research forum, to help people become master traders!

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