Tumbling stock market, slashed credit drags down value
10-07-08:
It has just been a house of cards for Ford Motor Company this week. Carried down with a 500 point DOW slide today, Ford stock (F) today hit an historic low of $2.92 a share at market close. It is a 23 year low as the stock hit $1.03 in 1981 or about $2.57 adjusted for inflation, so it has been lower than this before.
Regardless of previous precedent, this is a scary measure for Ford which enjoyed stock values of $35-37 a share in the late 1990’s and even $16 per share as recently as 2004. After hours trading today has been hovering around $2.99, so where it will go on Wednesday is anyone’s guess.
Advertisement
In addition to all the havoc in the stock market, some of Ford’s plummeting value of over 20% today was attributed to Fitch lowering their credit rating further into junk status. It is a bargain at this point to investors who are willing to gamble however. Financials blogs are full of posts this afternoon by investors pulling the trigger to buy up the sell off. Many feel that at today’s price of under $3.00 a share, there is much further to go up again than to fall.
History is 20/20 though. Gloom and doom is the talk of today. That $1.03 stock price in 1981 was at another bad time in our market cycle. Those who took advantage of that buy back then would have quadrupled their investment by 1984. Just a short time later in 1987, that stock was worth $15.76. Simple math tells you that $1000 invested in 1981 became worth $15,000 by 1987. So, all bad news has a silver lining if you are in the right place at the right time.
