good morning all. Why couldn't Ford have been the "best performing blue-chip of 2006"?
Excerpt from Chuck Jaffe/CBS Marketwatch
Stock slips
There's little doubt that I get in the most hot water with stock picks. Of the 15 stocks tagged with the "stupid" label in 2006, 10 lost at least 20% of their value after being picked; six of those stocks not only dropped by 40% or more, but remain there today.
But I hate losing a lot more than I like winning, and my mistakes this year were doozies.
I picked General Motors Corp. (GM : General Motors Corporation
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Last: 30.59+0.82+2.75%
8:56am 12/28/2006
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30.59, +0.82, +2.8%) after a reader asked if the stock was beaten down enough to buy and I said that the company's cost burden, declining market share, big losses and junk-rated debt had not wounded the share price nearly enough. I called for a dividend cut, said the price had to fall 25% just to reach fair value, and 40% more before it would be a buy again. See previous Chuck Jaffe.
That pick looked spot on for about three months, as the dividend was cut in half and the stock languished with a 15% decline.
That's when GM hit the gas, becoming the best-performing blue-chip of 2006, contributing mightily to the Dow Jones Industrial Average's climb to record heights. Despite a recent pullback since billionaire investor Kirk Kerkorian's November decision to sell his stake, GM is up more than 30% since I wrote about it.
I remain concerned about the company's burn rate and the stock's valuation, but there's no denying I was wrong in answering the reader's question; the company's stronger-than-expected performance had it more poised for a rebound than I recognized.
.....Endeavor to persevere
