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Strategies & Market Trends : Value Investing
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To: Sam Citron who wrote (19943)12/2/2004 7:18:20 PM
From: Paul Senior  Read Replies (5) of 78525
 
Fwiw, I've now started a very small position in Toyota (TM). Given that I like to hold shares for a while, TM seems to me to have among the best prospects going forward of the automakers that I've been looking at. With its current p/e of 10.75 and a forward predicted under 10 (per Yahoo), that's not that much more expensive than 7 and 7.4 for my holding of GM. And TM gains market share, while GM continues to lose.

Betting on GM is betting that they'll continue to muddle through, the stock will fluctuate and eventually move up, and that the 5% dividend is attractive and won't be cut. It's a bet that things might stabilize or turn positive for GM - at least as perceived by investors.

As regards these bets, it seems to me that going with GM now and NOT betting on TM at current price (i.e ignoring it as an investment) is like betting that Toyota will screw up or somehow begin to lose market share, while expecting that GM can staunch or reverse its multi-year market share losses.

Doesn't seem sensible to me. That would be two big changes. Sure trends can be reversed (NSANY a great example), but for somebody who intends to hold a position at least 18-36 months one ought to go with the trends one sees in front of one's face, especially as there seems to be no evidence that the trends will be changing.

I am weighing closing out my losing GM position.
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