Whenever someone asks me if a stock can go lower, I reply "of course." As investors have learned the hard way over the past few months, a company's shares can go all the way to zero. Just ask holders of Circuit City Stores Inc. (NYSE: CC) (bankruptcy), General Motors Corp. (NYSE: GM) (near-insolvency) and Sirius XM Radio Inc. (NASDAQ: SIRI) (crushing debt load) whose shares are heading off a cliff.The number of companies trading at or near their 52-week lows is staggering. Investors are faced with some of the biggest bargains they have seen in decades or the potential to get burned even further as corporate earnings deteriorate further. I am not sure whether to dip my toe further in the market or to invest in more Mason jars that I can fill with the remnants of nest egg and bury in my backyard.
One thing is for certain, stocks are getting cheap. The challenge for investors to figure out is where the market has thrown out the baby with the bathwater. Here are some examples:
- Google Inc. (NASDAQ: GOOG). The largest search engine company is trading at near a three-year low. Chief Executive Eric Schmidt has said the economy is far worse than he expected. The company traded at $307.93, near its 52-week low of $300.52. CNBC's Jim Goldman is baffled by the market's reaction to Google, as am I.
- Citigroup Inc (NYSE: C) has had more ups and downs than Cher. Shares of the big bank last traded at $10.80, near its low of $10.34. It is down more than 63% this year. Remember, sometimes stocks are cheap for a good reason -- like business is bad.
- Kellogg Co. (NYSE: K) reported better-than-expected third quarter earnings and gave bullish guidance. The market, though, could have cared less. Shares of the cereal maker are trading at about $48, near their 52-week low of $45.25. They are down more than 8% this year.
- General Electric Co. (NYSE: GE) has been in Wall Street's dog house so long it should consider a long-term lease. The conglomerate trades for about $17.73. Its 52-week low is $17.27.
- Saks Inc. (NYSE: SKS) already has gotten its lump of coal from investors worried about a horrid holiday season. Shares of the retailer are down more than 77% this year. The stock is trading at $4.66, near its 52-week low of $4.23.











Reader Comments (Page 1 of 1)
11-11-2008 @ 5:40PM
Robert said...
Why google you ask
1) Massive payroll
2) No major success after search and most the new products are struggling. Forget phones, with the crash in consumer spending this is a no win business.
3) A huge crash in ad revenue is coming
4) AD sense is disaster for people who are using it.
5) It search is starting to be less useful (First sign of trouble at yahoo was search turned crappy), you can test this by searching Online Auctions, Where is ebay? Should be number 1 or 2 or 3 or 4…
http://doomisnigh.blogspot.com/
11-11-2008 @ 5:48PM
beachpaul said...
The P/E ratio was insane, from the IPO to even now. It was born with hype and now is dying a slow death from it.
11-11-2008 @ 8:00PM
plewis said...
It's amazing to me the editorials I read ...from someone who is trying to make a name for themselves without any reservation to who it might be hurting...I spent 18 years in the media and I can spot a climber at a phrase or two...if you have no idea what you are talking about or have any invested interest just keep your mouth shut....someday as they say what goes around comes around.....
11-11-2008 @ 9:39PM
beachpaul said...
The Media? They don't give a damn who they hurt. They never go back to get the rest of the story, let alone the other side. Sensationalism is what they peddle,that and ad space. One of them drops dead and they elevate him to sainthood. Give me a break!
11-11-2008 @ 10:19PM
Ted King said...
A great example of shoddy journalism.
A teaser headline followed by a bunch of easy-to-find stats.
Bottom line: The question posed -- how low can it go? -- is never answered.
No attempt is even made by experts to crystal-ball a reasonable answer.
Another waste-of-time financial article, apparently written by amateurs.
11-11-2008 @ 10:48PM
jtrader said...
Jonathan, I enjoyed your blog. Google is the best at what it does and is enhancing the Google experience with its new products. So what if some analysts downgraded Google. Consider the floundering outfits for whom they work! I bought into Google yesterday. Why not? You want limited growth? Buy Barclays or Goldman Sachs! You want stock in a strong company which still employs people? Get Google!
11-11-2008 @ 11:27PM
Sam said...
Sure they are cheap stocks - sure they are at 52 week lows.
But before you invest your hard earned money you gotta ask yourself - is it a good value.
I did a quick analysis on the ones listed in the article and none appealed to me.
Stocks on my watch list - BNI, POT, JPM, NWPX, FSLR
Sam
http://tickertoday.blogspot.com
11-12-2008 @ 5:43AM
Kim said...
Go down ! Go down ! Go down ! I'm waiting for BERKSHIRE HATHAWAY INC. to be worth 5 cents a share so I can affort a 1000 shares...
11-12-2008 @ 5:43AM
BHarrison said...
As Jim Cramer, the stock expert stated, something to the effect that "A cheap stock" is "not a bargain" if the company is going to go bankrupt in the long run . . ." That's rational, basic "common sense".
The reality is that the economy is going to get a lot worse during 2009, and our DEEP RECESSION may easily turn into a SEVERE DEPRESSION. Even the normally optimistic economists, the "front men" for the special interests groups, are now admitting that the economy and the previous economic projections may have been GROSSLY OVER OPTIMISTIC . . . and they tend to be overly optimistic with even their latest projections.
I was going to try to hang in there and ride it out; but after be hit with a $31K loss in "conservative" 401K investments, and with the long term gloomy forecast, I think that I will do like the big guys and the hedge funds) are doing and "cash out" and minimize my losses. The "hand writingIS on the wall"; and it is not good news, not even for us conservative people who have paid for our homes, lived conservatively, and built up our savings that are npw being depleted.
The dollar value of the mortgages that are being defaulted on is really minimal in COMPARISON to the value of the corporate FRAUD that has expoenentially magnified/increased this amount due to FRAUD against the American investors. The Bailout plan is not, and has NEVER BEEN to "save the mortgages of families"; it was to bailout the CORRUPT corporations to keep our national economic infrastructure from collapsing under the weight of the FRAUD that Congress had allowed to occur.
In spite of the baiout monies, over 1.2 million have become unemployed so far; and this is going to get a LOT WORSE soon. Yet, the CORRUPT CEOs are still running many of the corporations and getting their exorbitant salaries; and are planning on paying out bonuses to managment of corporations that have suffered horrific losses due to their managment. Hell, Paulsen, the guy running the Bailout, is one of those previously CORRUPT CEOs. We have "the foxes running the investigation and recovery of the slaughters at the henhouses . . ." Does that make sense?
The American people are being DUPED throughout all of this. A LARGE segment of those "homeowners" in foreclosure are real estate speculators who over extended themselves with schemes to get wealthy quickly. It is past time to start "letting the 'market' adjust these matters "naturally" . . . those corporations and individuals who are overextended should be allowed to go into bankruptcy or to be bought by other corporations . . . a "natural" makrket resolution to these mattters. It's time for the irresponsible parties to absorb the result of their imprudent or CORRUPT actions.
The $700 BILLION Bailout plan was NEVER about "saving home mortgages"; it was about saving CORRUPT and irresponsible corporations to save the collapse of our national economic infrastructure . . . now it is time to let the chips fall wherever they may fall. Otherwise we are "tossing "good money" after bad money . . ." and the results will be even MORE DISASTROUS.
11-12-2008 @ 8:58AM
Karl said...
Stocks have been following the price of oil and may bottom out when the oil price does.(currently at 58.30) Gold and the dollar trade inversely while the dollar is backed by oil so when oil rises the dollar declines. Very tradable realtionships. If earnings are expected to decline in 2009 by 15% I wouldn't be long in stocks only play short term rises. With criminals running the show in DC and Wall St. and the globalist oil banking elitists controlling them you have to go with Chindia when things turn around and maybe agriculture in the USA. 300 million in the USA and 2.6 billion in Chindia? Not even close. John D. Rockefeller's ghost with JP Morgan right next to me.
11-12-2008 @ 10:19AM
Phillip Katt said...
The US is heading into a deep, prolonged recesssion. No one under the age of 45 has ever experienced a deep recession. Most of the "experts" are under the age of 40.Stocks can not climb in that type of environment. Anyone who is bottom fishing now, will have most of their money wiped out.
Cancel your cable, stop eating out, and put all of your money in an insured account. Forget the market until at least 2011.
11-12-2008 @ 10:55AM
ROBERT LUCAS said...
If union thugs will have power to structure the finances of any company by the desire of the democrats to allow for the union to eliminat secret ballot voting, why would anyone want to purchase stock?
11-14-2008 @ 5:49AM
Dave said...
Reagan started a revolution that's led to less and less government control. Our current market woes have resulted in part from the anti -regulation, anti- government people who want to be able to legally frisk the public without restraint. If government doesn't work, then let's fix it! Most biggies in government service are directly out of the business sector, so no wonder the laws are in their favor.
11-16-2008 @ 4:41PM
sam said...
I recently conducted a poll with the following questions.
When will this market bottom?
How low will the Dow Jones Industrial Average go this week?
Approximately how much of your portfolio is in cash?
and the answers were no where near what i thought they would be.
I also added a new one that everyone should participate in.
Should the big three get a piece of the bailout pie?
http://stocksinthismarket.blogspot.com/