05-23-2012, 01:55 PM
Really good advice. Its interesting to read the 10 reasons to not invest in stocks long term, and realize how many of those 10 reasons caused me to lose money.
<!-- m --><a class="postlink" href="http://www.marketwatch.com/story/10-hazards-of-buying-individual-stocks-2012-05-23">http://www.marketwatch.com/story/10-haz ... 2012-05-23</a><!-- m -->
1. Economic Risk: The recession decimated the stock prices of companies as diverse as YRC Worldwide YRCW +0.64% (trucking), Micron Technology MU -0.23% (semiconductors), Gannett GCI -0.78% (media) and Office Depot ODP +1.11% .
2. Industry-Specific Risk: The financial crisis that accompanied the aforementioned recession clobbered the share prices at some of the nation's largest financial institutions, including AIG AIG -2.06% , Citigroup C -1.44% and Bank of America BAC +0.43% .
3. Government Policy Risk: President Clinton used Fannie Mae FNMA +1.48% and Freddie Mac FMCC +1.48% to ensure that unqualified people were able to buy homes that they couldn't afford. The shares of each have declined by more than 40% over the past decade.
4. Material Cost Risk: High fuel prices are one reason that American Airlines is bankrupt. And Alcoa's AA -0.19% stock has dropped by 11% partly because the price of aluminum has been so unpredictable.
5. Technological Risk: A decade ago, who would have thought that the august Eastman Kodak Company , eclipsed by the digital age, would be bankrupt, foundering aimlessly, and down 30% in share value?
6. Competitive Risk: Sprint Nextel S +1.25% , which has long struggled for telecom market share, is the poster child for competitive risk. Down 17% over 10 years.
7. Legal Risk: Tenet Healthcare THC -1.52% has had legal problems since 2007 and in April agreed to pay the government almost $43 million to settle alleged violations of the False Claims Act. 10-year decline: 18%.
8. Key Executive Risk: Until the Facebook FB +3.48% IPO mania set in, the looming question in Silicon Valley was what will become of Apple AAPL +1.24% now that Steve Jobs is gone? And sometimes CEOs die more suddenly, as Micron Technology's Steve Appleton did when the plane he was piloting crashed in February.
9. Management Risk: Company managers can make big mistakes. Jamie Dimon and his crew at J.P. Morgan Chase JPM -1.21% , revered for deftly managing through the financial crisis, stunned Wall Street earlier this month by announcing a $2 billion blunder. Shareholders lost 15% of their money in the days following the news.
10. Management Corruption Risk: Tyco International's TYC -0.48% ex-CEO Dennis Kozlowski was convicted in 2005 for looting millions from the company. The shares were pummeled. Kozlowski was denied parole last month and could remain in prison for another 18 years.
<!-- m --><a class="postlink" href="http://www.marketwatch.com/story/10-hazards-of-buying-individual-stocks-2012-05-23">http://www.marketwatch.com/story/10-haz ... 2012-05-23</a><!-- m -->
1. Economic Risk: The recession decimated the stock prices of companies as diverse as YRC Worldwide YRCW +0.64% (trucking), Micron Technology MU -0.23% (semiconductors), Gannett GCI -0.78% (media) and Office Depot ODP +1.11% .
2. Industry-Specific Risk: The financial crisis that accompanied the aforementioned recession clobbered the share prices at some of the nation's largest financial institutions, including AIG AIG -2.06% , Citigroup C -1.44% and Bank of America BAC +0.43% .
3. Government Policy Risk: President Clinton used Fannie Mae FNMA +1.48% and Freddie Mac FMCC +1.48% to ensure that unqualified people were able to buy homes that they couldn't afford. The shares of each have declined by more than 40% over the past decade.
4. Material Cost Risk: High fuel prices are one reason that American Airlines is bankrupt. And Alcoa's AA -0.19% stock has dropped by 11% partly because the price of aluminum has been so unpredictable.
5. Technological Risk: A decade ago, who would have thought that the august Eastman Kodak Company , eclipsed by the digital age, would be bankrupt, foundering aimlessly, and down 30% in share value?
6. Competitive Risk: Sprint Nextel S +1.25% , which has long struggled for telecom market share, is the poster child for competitive risk. Down 17% over 10 years.
7. Legal Risk: Tenet Healthcare THC -1.52% has had legal problems since 2007 and in April agreed to pay the government almost $43 million to settle alleged violations of the False Claims Act. 10-year decline: 18%.
8. Key Executive Risk: Until the Facebook FB +3.48% IPO mania set in, the looming question in Silicon Valley was what will become of Apple AAPL +1.24% now that Steve Jobs is gone? And sometimes CEOs die more suddenly, as Micron Technology's Steve Appleton did when the plane he was piloting crashed in February.
9. Management Risk: Company managers can make big mistakes. Jamie Dimon and his crew at J.P. Morgan Chase JPM -1.21% , revered for deftly managing through the financial crisis, stunned Wall Street earlier this month by announcing a $2 billion blunder. Shareholders lost 15% of their money in the days following the news.
10. Management Corruption Risk: Tyco International's TYC -0.48% ex-CEO Dennis Kozlowski was convicted in 2005 for looting millions from the company. The shares were pummeled. Kozlowski was denied parole last month and could remain in prison for another 18 years.
Maul, the Bashing Shamie
"If you want to change the world, be that change."
--Gandhi
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"If you want to change the world, be that change."
--Gandhi
