Anyone Planning On Buying Under-Priced Stocks Today?

**Lee** · 09-15-2008, 03:12 PM

We have about $500 in our trading account that we're thinking about using to buy some Lehman Bros and AIG stocks while they are under-priced.

Anyone else considering taking a gamble on these stocks while the prices are so low?

I almost bought Delta stocks a few years back when they were at $0.25 a share but was talked out of it, this time though i think im gonna buy a few thousand Lehman Bros and take a risk of losing $200 or so on them and another $200 on AIG.

Regards,

Lee

**nickbaer** · 09-15-2008, 03:30 PM

I invest in models, that I make movies with.

So far, they have out performed Wall Street by about 50 to 1.

**markwolff** · 09-15-2008, 11:25 PM

I think General Electric (GE) is a steal right now at $24 i don't think it has been this low in decades. not sure if it will go back up in the near future, but buy and hold it for 5-10 years and you will do very well with that stock at that price. It's too good of a company and well diversified, 50% of revenue comes from outside the US.

**abostonboy** · 09-16-2008, 04:39 AM

Lee,

For the love of God don't buy any of these stocks. I just lost about $80,000 on Lehman (after my bf who works for JP Morgan told me to buy the damn thing). AIG is going to get bailed out by the Feds real soon. NEVER EVER buy a stock in a company that is in Bankruptcy.

**abostonboy** · 09-16-2008, 04:42 AM

Originally Posted by markwolff

I think General Electric (GE) is a steal right now at $24 i don't think it has been this low in decades. not sure if it will go back up in the near future, but buy and hold it for 5-10 years and you will do very well with that stock at that price. It's too good of a company and well diversified, 50% of revenue comes from outside the US.

Don't buy stocks in companies that are at a low. Buy in companies that are at their peak. there is a reason they are at their peak. I wouldn't touch GE with a ten foot poll. I did buy some Apple today.

**SluggerJ** · 09-16-2008, 11:21 AM

Fannie and Freddie are priced as if they went bankrupt in a receivership deal, which isn't the case. Being that it's a temporary conservatorship, the stocks SHOULD survive. If the $500 is worth losing, when the housing market is about to get good news (it will eventually but not yet), Fannie and Freddie may be a steal. They'll be the first stocks people buy at the first sight of good news.

Worst case, you lose 500 bucks.

And Apple may be bottoming out soon also, hopefully.

**abostonboy** · 09-16-2008, 11:42 AM

I really wouldn't touch Fannie or Freddie. Under the conditions that the Govt took them over and the priority that they give to common shares it's just not worth it at all. I don't see a turnaround for Fannie or Freddie any time soon at all.

**Lee** · 09-16-2008, 11:44 AM

Up $50 overnight on LEH

Regards,

Lee

**markwolff** · 09-16-2008, 12:21 PM

I've never heard of buying companies at there peak, so you buy high sell low? Buffet or Sorros never told me that one!
I have allways looked for good companies, with good fundimentals, that have been beaten down by the overall market GE is a perfect one, lot's of upside, i think the stock is pretty near bottom now, look for it to move upwards, as a 5 year buy and hold, it will be a winner
Apple great company, but allmost fully valued, not alot of upside to that stock. Ipod sales are slowing, i phone sales are flat, lot's of new competition from RIM (blackberry) and HP. The stock market is a mess right now, i would not be putting too much money in there right now, but there are some great companies that are traiding at 10 year lows right now, that over time will go up. The time to buy a stock is when people are selling it, and the price is low, not when it's flying high at or near it's peak. The secret is you need to do your homework on what companies are down because they are poorly run companies, and the good ones like GE that are down because of overall market forces, ie a sell off. That's my lesson today, No charge this time!

**Lee** · 09-16-2008, 01:51 PM

Here's to hoping Barclays decides to buy the largest chunk of Lehmans assets - Its brokerage firm in the near future, after saying that talks were off over the weekend, it now appears Bob has his sites set back on aquiring that segment of Lehman Bros :thumbsup:

Regards,

Lee

**abostonboy** · 09-16-2008, 01:57 PM

Originally Posted by markwolff

I've never heard of buying companies at there peak, so you buy high sell low?

No. Not at all.

I forget the name of a pretty famous trader that really embraced this strategy. Basically, it says if a stock is selling low then it is a damaged stock for a reason. Cash flow, management, poor marketing, bad products etc. So, does one really want to invest in a "damaged" company?

"Peak" is a somewhat subjective term. It could be a 52 week high. For some companies it may even be a 3 year high. Those companies that are trading at the level are GOOD companies. Otherwise, they wouldn't be trading at a high.

Look at Apple: I have bought Apple quite a few times at it's peak in the past 5 years only to have it go up and up. I have sold it and bought it again later at an even higher price that I sold it, only to have it go up again.

MANY companies that have traded at their "peak" have gone on to double and triple in stock price.

"Peak" is not the highest that a stock will ever get, it's just a measure of how it has done relative to a period of time in the past. Stocks that are trading at a peak tend to be good companies.

On the flip side, many look for damaged companies that they see a turnaround possible. That is risky. Companies that are damaged by various problems; mgmt, cash flow, poor product placement etc tend to have a harder times turning around.

The main risk in buying a company trading at it's peak is the market conditions can damage the companies stock, but the company is still a solid company. It's much easier for a good company to overcome a poor market than a damaged company to turn itself around.

My 2 c

**abostonboy** · 09-16-2008, 02:06 PM

Originally Posted by Lee

Here's to hoping Barclays decides to buy the largest chunk of Lehmans assets - Its brokerage firm in the near future, after saying that talks were off over the weekend, it now appears Bob has his sites set back on aquiring that segment of Lehman Bros :thumbsup:

Regards,

Lee

Lee,

If that happens the proceeds will most likely goto creditors vs shareholders.

**Maryflixxx** · 09-16-2008, 02:10 PM

I wouldn't touch AIG - they put their Canary Warf building in London England up for sale. All 5000 employees showed up for work to notices posted in the windows saying "you no longer have jobs, go home".

Actually, 2 buildings in Canary Wharf went up for sale this morning. Can't remember the other company but CHRIST.

I don't feel so sorry for the brokers, but the secretaries, janitorial staff etc. are all out of work too.

The Brit Govt is putting together a bail out, though, so they may just survive.

Mary

**Lee** · 09-16-2008, 02:13 PM

Originally Posted by abostonboy

Lee,

If that happens the proceeds will most likely goto creditors vs shareholders.

If that happens, the share prices will still go up though.

All the American public will hear is 'Lehmans Bros bought by Barclays' and people will start buying shares again, thus raising the prices, which in turn will be the perfect time to sell

Never under-estimate the power of stupid people en mass

Regards,

Lee