Best stocks to buy right now?

**Johansen8** · 10-21-2008, 02:03 AM

just my opinion
buying stocks right now is like playing in Vegas. Sure you could try to buy some financial titles, as they are cheap now and could bring a lot of money in the future. Or you could lose it all as they go bankrupt. If you want a strong portfolio there are 3 rules:
1. Diversify
2. Diversify
3. Diversify
Just buying stock from one sector makes you vulnerable to bubble bursts and other unexpected incidents.
If you want to be on the safe side, don't buy stocks at all right now. It's time for gamblers!

**Broken Arrow** · 10-21-2008, 04:55 AM

Well, if I knew exactly what to buy all the time, I'd be rich right about now.

However, it IS a good time to buy in and keep on investing. So, in that sense, I agree with Johansen, and to be sure that you are properly allocated and diversified.

(But if you must do only individual stocks, I recommend to stay away from GM. The merger with Chrysler looks like a train wreck, and Hummer-- what was once their cash cow-- now looks more like a diseased-ridden half-dead corpse that they can't sell even if the company depends on it....)

**buzz** · 10-21-2008, 02:14 PM

Most of the Index funds are down so substantially, I wouldn't bother with individual stocks right now.

Examples (Vanguard ETF's, from 52 week high):

VTI Total Stock Market (US) -38%

VWO Emerging Markets -58%

VGK European Region -50%

VPL Pacific Region -46%

Recovery to pre-bear market levels could yield 100% returns, plus dividends.

**scp** · 10-22-2008, 08:31 AM

How about FRE? (Freddie Mac)

**Broken Arrow** · 10-22-2008, 08:50 AM

Originally posted by scp View Post

How about FRE? (Freddie Mac)

HAHAHAHA, yes, good one.

**scp** · 10-22-2008, 09:06 AM

no no no, seriously, hubby wants me to look into it, I don't know much about it other than it seems really risky but DH wants to roll the dcie on this one...

**Broken Arrow** · 10-22-2008, 09:26 AM

Oh! I thought you were joking....

Well, Freddie and Fannie are the worst of the worst stocks out there right now.

The worst.

I wouldn't roll the dice on those even if I wanted to gamble.

Both have essentially gone belly up (if they had been given the chance). However, Uncle Sam stepped in and raised them from the dead into the freakish zombie corporations that they are now.

Uncle Sam's corporations don't care about shareholder interests. They are strictly in it for the sake of preserving the stability of the lending industry, and even Bernanke has come out and said that shareholders will have to bear the brunt of the damage. That's also why smart money have already left, sending the stock down to $0.85 right now, off from its original perch of $20 to $30 per share.

About the only people left are foolish lost souls who think they can "strike it rich" in those desolate wastelands. But heed my words, it'll eat you alive. That's what happened to my uncle. He bought Fannie and lost 90% of its value. Seriously. Actually, more than 90% now that the stock has plunged below $1 per share.

And be forewarned that just because it's $0.85 right now, that doesn't mean it can't fall any further. It can, and it has before, all the way down to $0.30 per share. If it does that again, you're look at 64% LOSS that will require 183% GAIN just to BREAK EVEN.

Seriously, if your husband wants to gamble on stocks, there are much more interesting and promising ones out there than this.

Oh, and I found a good picture of Freddie. Are you sure you really want to invest in him?

**scp** · 10-22-2008, 09:43 AM

Hmmm, what if I were to put an order in for .20? Is there any way for FRE to just disappear? And the morgages it still has still has some value, right? Would it make sense to look at how much net assets they have per share and price it out that way?

Thanks brokenarrow, I'll forward that to DH and let him decide/do the math on that (I'll just have to put a cap on his gambling)...

**Broken Arrow** · 10-22-2008, 10:33 AM

The price can be very misleading. Just because something is cheap, it doesn't always mean it's a good buy. Take Goldman Sachs for example. The stock looks ridiculously expensive, at $118 or so per share. However, it's Price to Earnings ratio reveals that it's a very good buy. The current P/E is 7 right now, and it was 6 the last time I bought it.

Contrast that with Bank of America, which seems much more affordable at $23 and change right now. However, its P/E is well over 20! (The lower the P/E, the better.) Now, I don't dislike BAC, but to me, it's not cheap either.

Most traders look at P/E because earnings is the life-blood of any company. Freddie doesn't even have one listed anymore....

Even if you manage to find a good buy, you can still lose money on it. There's no law that says a $0.20 stock can't fall down to $0.10. And that's where traders do their research to see what prospects a company has; it's upsides and downsides. Personally, if you buy into something and you have no concrete idea how the upsides and downsides factor in, then you're gambling blind.

And while I am not against the idea of other people gambling their money for entertainment sake, I am here to make money. I want to do everything legally possible to tilt the odds in my favor. In other words, the upside has to out-weigh the downsides as much as possible, and yes, that does include looking at the pricing.

However, I hope that I have also illustrated that pricing alone isn't everything... and in fact, it can be dangerous to rely on just pricing alone for your buying decisions....

**tripods68** · 10-22-2008, 10:53 AM

[QUOTE=Broken Arrow;191110]The price can be very misleading. Just because something is cheap, it doesn't always mean it's a good buy. Take Goldman Sachs for example. The stock looks ridiculously expensive, at $118 or so per share. However, it's Price to Earnings ratio reveals that it's a very good buy. The current P/E is 7 right now, and it was 6 the last time I bought it.[QUOTE]

Well...gosh BA with this positive news I can see the buying frenzy for GS propping up the price per share once again---all while trying to dump the stop at a profit. LOL

**Broken Arrow** · 10-22-2008, 11:06 AM

Hehe, er, ok....

I haven't touched GS since the last time. Current pricing seems fair to me now, and there's no looming upsides that I am aware of....

Between the LIBOR thawing, but the still chilly recessionary climate, the short-term market seems to be moving sideways. The most dangerous market in my opinion.

I've essentially gone back into hiding. That is, unless I see another opportunity.

Best stocks to buy right now?