Investment opportunities: ripe or foolish?

[DanMa1156]

Today the Government agreed that it'd take a 36% state in Citigroup. Their stocks are currently trading uner $2.00; SiriusXM shares are under 20 cents, and Boeing are not anywhere near where they used to be (their stocks are worth less than half of what they were a year ago...) For those with some investment experience, would you say the time is ripe to buy into these companies (ok Sirius has a lot of problems, but still...) or does anyone think that they will actually fail?

Just seems like this is a good time to buy into stocks...

 

[phrogdriver]

Everything's on sale--go for it. It may not be the bottom, though. Keep a deliberate approach and dollar-cost-averaging will do you well.

 

[GO_AV8_DevilDog]

I would say invest in a stable company right now, but only if you're really willing to stick it out for the long haul.

good things to do right now is mutual funds or CD's

Think of a CD as an investment into a (OMG) bank.
you have a set interest rate and its INSURED!

plus if more people were getting CD's right now then banks would start to come around out of this funk.

and by funk I mean severe crisis.


Normally any college student would be a horrible person to take investment advice from but from external special circumstances I have had a large chunk of money invested in mutual funds or CD's since I was in 8th grade.

I will say that currently my mutual funds are not worth touching at the moment as they have taken a huge hit, but my CD's have always remained a steady means of gain.

But if you are wanting to take a stab at real stock market, talk to a broker, beyond that all I can say right now is go with your gut and to DIVERSIFY! DIVERSIFY! DIVERSIFY!

 

[Ektar]

I agree with what most have said, everything is on sale at the moment. However, caveat emptor or buyer beware, because you want to make sure you invest in companies that will be still be around in 5, 10, 15+ years. I won't tell you which companies to invest in, but do your research and you will probably come out a winner over the long haul.

Now, my personal opinion, if you don't have a Roth IRA or some other retirement account open, now is the time to open. All of the mutual funds that you might consider putting your money in for an IRA are deeply discounted. Considering you would be putting your money into one of those funds for 30+ years (assuming you are in your twenties) you will definitely come out a winner on that investment.

Just my toughts...

 

[A4sForever]

NEVER listen to pilots re: making investments!!!

It's one of the three most dangerous things in the world!

 

[CommodoreMid]

I bought an index fund a month ago. I've lost some money now in the short run (which I expected), but if you're willing to eat the losses, I'm hoping to sell it in a couple years and make some bank.

 

[Godspeed]

Think of a CD as an investment into a (OMG) bank.
you have a set interest rate and its INSURED!

plus if more people were getting CD's right now then banks would start to come around out of this funk.

Normally any college student would be a horrible person to take investment advice from but from external special circumstances I have had a large chunk of money invested in mutual funds or CD's since I was in 8th grade.

CDs? Are you effin kidding me dude? Maybe your CDs from eighth grade are doing ok, but think about current rates... Even better, google them. The current yield for a 5 year CD is between 1-3%. Hardly a good return on your investment... Perhaps just par with inflation.

With those kind of rates, you'd probably even be BETTER off putting that money in to a savings account... I liked your first bit of advice about index mutual funds.

My opinion: Since we have our whole lives ahead of us, I put a piece of my money (1/2 or so) into high risk/aggressive growth mutual funds, and the other half into index funds. That's my approach.

I'm not good enough to stay on top of stocks, but I throw a few bucks towards the companies that are selling <$2.00/share that are broke. I'll admit, this is pretty much gambling... But it sure is fun!

My .02

 

[phrogdriver]

NEVER listen to pilots re: making investments!!!

It's one of the three most dangerous things in the world!

I thought A4's investment advice would sound more like this:

 

[RHPF]

The fundamental issue with CDs at the moment is that their rates are so incredibly low that your return isn't worth the funds being locked up. You would be better off IMO keeping it liquid (savings) in case something goes bad, or investing it long term (stocks/mutual funds/IRA/etc) and going for a better return. When CDs were ~3-5% a couple years ago that was a different story. My .02

Edit: ING for example is 1.75 for 12-36 month CDs. Not a good use of money IMO.

 

[scoolbubba]

spend all of your money. it's the only way to spur economic recovery.

 

[The Renegade]

According to that article, the government's stance is that C is too big to fail - I absolutely agree with that. However, there's a large capital structure between the common and bankruptcy - including 1.7B in debt. That debt isn't going anywhere, and you have the preferreds next in line on top of that. The common is already at 1.50. At this point, the only ones holding are speculators and those who've already lost so much that what's another 1.50. The common is basically worthless.

If anyone thinks differently, go take a look at AIG's chart again.

At the end of 08, C only had 150B in Equity. Just a 7-8% decline in assets would wipe out equity. So far, I've only seen things get a lot worse in Q1, not better. Bottom line, C has no equity value. Common is for suckers.

Don’t do it!

 

[GO_AV8_DevilDog]

The fundamental issue with CDs at the moment is that their rates are so incredibly low that your return isn't worth the funds being locked up. You would be better off IMO keeping it liquid (savings) in case something goes bad, or investing it long term (stocks/mutual funds/IRA/etc) and going for a better return. When CDs were ~3-5% a couple years ago that was a different story. My .02

Edit: ING for example is 1.75 for 12-36 month CDs. Not a good use of money IMO.

What? no.

Keeping them liquid is no excuse to pass up the interest rates (while low) that are considerably higher than current savings accounts. Plus he was talking about investments so the funds would be "tied up" anyways. Also most banks allow you to withdraw your cd early with the penalty of giving up a portion of the interest if its an emergency, or with sufficient notice, no penalty at all.

The CD is not supposed to be a short term high pay investment. It's supposed to be a long term SAFE investment because it is assured and insured.

/rant

 

[DanMa1156]

Appreciate the advice so far. Agreed with the comments that CD's will barely outpace inflation if it even does that. I started a Roth IRA actually this week; I'm using my pre-comm loan for that; bought into Vanguard's S&P 500 Index fund which historically returns 9+%... I figured that was a good start for a retirement account and I'll keep adding to that and some other mutual/index funds over the years with that Roth IRA. I also threw $160 last week at Sirius XM, which at the time was 1,000 shares... and I think in the long run they'll recover. If they go totally banrupt, eh, I lost $160 but I learned something.

Just was wondering everyone's thoughts on the matter. I may study Economics to include a lot of market activity, but I know that does not make me an expert by any means!

Thanks a lot everyone - appreciate all the responses.

 

[DanMa1156]

What? no.

Keeping them liquid is no excuse to pass up the interest rates (while low) that are considerably higher than current savings accounts. Plus he was talking about investments so the funds would be "tied up" anyways. Also most banks allow you to withdraw your cd early with the penalty of giving up a portion of the interest if its an emergency, or with sufficient notice, no penalty at all.

The CD is not supposed to be a short term high pay investment. It's supposed to be a long term SAFE investment because it is assured and insured.

/rant

See- fundamentally though, say I do a 5 year CD. On average, I've seen that hovering around 3% right now, which is a really poor investment, given that inflation in the past decade has hovered around the same rate, so I'd have a net gain of ~ 0%. So, with that said, some extra money that I have laying around I have thrown into a couple short-term CD's in efforts to let the markets recover but still make something more than the .4% interest or whatever I'm getting on my USAA savings, but it's still not a great return. I think I may soon be taking some of that money and throwing it at some of these (currently) underperforming mutual/index funds in the hope that within the next 5 years, the markets will recover and I'll have made some cash. So with that in mind, so as long as I have gained more than 3% on average per year in those funds, I would have beaten those CD's. If I don't because the markets by some crazy circumstances don't recover, I can always just keep them in those funds for a longer term. We'll see...

 

[GO_AV8_DevilDog]

It has been a while since I've shopped around for CD's, I think the current one I have was locked in at about 4.5%

Buying Mutual funds now, probably a great Idea, because, yes, the only way they can really go is up.

But something that I failed to mention but others thankfully have is an IRA, which now I see you've picked up on. Kudos!

hope the rest of your investments go well!