Ford vs GM

I am fairly new to investing in the stock market, but I have been watching from the sidelines for years. One thing I do understand is a lot of investors utilize emotion to influence stock picks. GM and Chrysler went begging from money from the government to continue doing business and Ford did not, instead opting for a possible smaller loan in the future if the other two go belly up. That gives me more confidence in Ford. They are in better shape financially. If this is true, why is GM stock outperforming Ford. Is it just because people think the government Will bail out GM forever? They will be back asking for more money next year. The billion that they are getting this year is just to get them through this year. So, please if you know or think you know why GM stock is doing better than Ford please tell me. Leave a comment! I really would like to make money and stocks are cheap now. Tell me what you would buy or not buy. Tell if you would stay out of the market right now, and if so where would you put your money to get a decent return. I know people read blogs to get advice, but I read a lot of blogs and the comments are full of "this is what I am doing". Let me know!

Not a Pump and Dump (A Proven Stock)

Since I am trying to increase my wealth in order to retire earlier, I am keeping a close eye on the stock market. I did not have any money in stocks prior to the current situation but I have been a lurker for years. I do have money in 2 401Ks but that is another story for another time. What I want to say is about Ford (F). Yesterday, it announced that it may be able to make it on its own, but want a $9B standby loan just in case either of the other two declare bankruptcy which would affect Ford because they use a lot of the same parts dealers, etc. Well to me this makes Ford seem like a good buy if they don't need a taxpayer bailout. However, my expectations of a massive buying spree was disappointing to say the least. Maybe I don't get it. Do people want Ford to take a $25B dollar bailout? It would put more money on their books but it would also add to their debt (If they plan to pay it back). Well, I for one will keep buying Ford, unless something radical happens. It was 2.70/share yesterday. When this stockaphobia people have is over and it starts climbing maybe I will be able to retire.

Undecided about the Federal Bailout

I am not sure what to make of the proposed federal bailout. At first I thought it might be a good idea to keep the US economy from sliding into a terrible recession or even a great depression. I also thought that perhaps the bailout would boost confidence in the stock market ans I could get in on some of the deflated stocks just as they would become more valuable. Now I am not so sure.

If the bailout did not happen I am not sure how it would affect me but I am sure I would survive. The proponents of this plan say banks do not have money to lend. Well I am not planning on taking out any loans anytime soon. I have several credit cards but I pay the balance off monthly. I have a mortgage but unlike the people who got caught up in the whole subprime ARM mortgage scheme, I knew better and had a great credit score, so I got a 6% 30 year fixed mortgage. I also am not trying to keep up with anyone or impress anyone so I bought a modest pre-owned house in a good neighborhood. I have two vehicles paid off so I will not be financing a car anytime soon.

The biggest uncertainty if the bailout did not happen is how it would affect my job. I do not know anything about how their finances work. I do know that they make most of their money on government contracts. We do consulting work for the Corps of Engineers, FEMA, Border Patrol, DOD and many others. We also do work for the private sector. However, if there were a run on banks, how would they pay me? I also have my savings in banks and 401ks. what would happen to that money. Does the FDIC have enough to cover all the the banks that could possibly fail? Would I lose all the money in the 401ks? 401ks are not insured by the FDIC.

I know it is not fair to use taxpayer monies to cover greedy banks and lenders, or ignorant people who fell prey to them. People should know how much home they can afford and live below their means not above them.

Whatever happens I know that I have no control over what congress does, but I do have control over how I react. I am not panicking, I just rode out two hurricanes and did not panic, I was prepared but I was prepared long before the storms formed. I think the same logic should be applied to the economy. I should have been prepared well before the "crisis", and you can bet that next time I will be.