Molly Masters the Stock Market

By Molly Helgren*, WeSeed

I don’t have as much activity this week due to the fact that few things seem to be doing well. The most disappointing company in my portfolio this week was RIMM. I bought RIMM a few weeks ago when my Portfolio was just getting started because I love their products and couldn’t live without my Blackberry.

After their disappointing earnings announcement, though, I’ve lost well over $500 in 24 hours from that position alone. But I’m holding onto it for now with the hopes that it will make a comeback after the initial buzz over their earnings dies out.

Here are my trades for this week:

Sold 100 shares of Amazon @ 90.28 – Amazon had a great week last week, and made about $1,200. The big jump seemed to not be very characteristic, so I took advantage of the large gain and got out. I still love this company, and will probably trade them again in the future as their goal is to become the biggest online marketplace out there.

Sold 200 shares of GM @ .76 – Was up a penny from when I bought it! I gave it a week and it barely moved, so with everything going on with GM right now I figured it wasn’t worth the risk and I’d take my $2 in earnings.

Bought 100 shares of Google @ 500.83 – As soon as it hit the $500 mark, I figured it was time to jump on the bandwagon with the hopes that someday it’ll reach back up to its $700 price per share before the recession was in full swing. I also love the company – I use Gmail for my personal emails, and always use google for searches, maps, weather, etc. on my Blackberry.

Bought 100 shares of Kraft @ 26.51 – There has been little support for Kraft’s attempted acquisition of Cadbury over the past few weeks. My hope is that this has driven the price down so that now is the time to buy before a deal is reached and it’s back on the rise.

Sold 100 shares of Wal-Mart @ 50.96 – I bought WalMart over the summer with the hopes that back to school season would raise the price. But so far it has been one of the poorest performers in my portfolio, so I just wanted to get rid of it. I lost about $900, but at one point I had been down almost $1,500 so I am glad I waited it out a little longer.

Bought 100 shares of Nintendo @ 33.25 – They announced this week that they will be lowering the cost of the Nintendo Wii from $249 to $199. Just in time for the holiday season! I now own 200 shares of Nintendo.

Bought 50 shares of Visa @ 71.00 – I’ve only owned Visa credit and debit cards. They were also in the headlines this week for announcing a financial education plan for consumers.

Bought 100 shares of Microsoft @ 25.71 – I’ve noticed a significant increase in Microsoft advertising recently with the upcoming release of Windows 7. I’m hoping that if the launch goes well, the shares I buy now will be much more valuable come October.

Bought 100 shares of Ralph Lauren @ 72.87 – They make a wide range of quality products from clothing to linens. I’ve had them in my Portfolio for a few months now and they have been one of my top performers, making me over $2,500 so far. Since I’ve been so pleased with their performance, I wanted to risk a little more to see if they would continue to pay off. I now own 200 shares.

Bought 100 shares of TiVo @ 10.20 – How else would I have been able to watch the season premiere of Grey’s Anatomy last night when I got home late? I love their product. Mine is set to record at least two shows every night. I get watch TV now that I never would have prioritized into my routine without TiVo.

My Portfolio is still doing well with an overall gain of $13,466.63. I currently own 6650 WeShares and hold $291,887.63 in stock positions.

This week I lost about $5,000, but I don’t feel discouraged because percentage-wise, the market as a whole was down as well. My goal for the weeks to come is to not only make as much money as I should proportionally to the market as a whole, but to be making decisions that help me beat the odds.

Gain/Loss For Today:

-1,587.72

Current Portfolio Value:

1,013,421.78

WeShares Currently Own:

6650

Overall Gain/Loss:

13,422.03

Overall Trades:

85

WeSeed Cash Available:

721,586.50

*Molly Helgren is an executive assistant at PEAK6, WeSeed’s parent company. Molly is putting together a WeSeed Portfolio based solely on the companies that she knows and likes. So far, she’s doing pretty well.

No Money-Back Guarantee for GM Stockholders

By Brad Laidman, WeSeed

I’m going to guess that General Motors is a tempting stock for the newbie.

For starters, there’s the memory of GM cars as the well-crafted,  muscular, elegant cars of yesteryear — the Don Draper of cars, like the 1958 Cadillac seen above. It’s a wonderful image, no?

Then there’s the fact that General Motors recently announced they will offer a 60-day money back guarantee to eligible buyers of new Chevrolet, Buick, GMC, and Cadillac vehicles. (Unfortunately, I don’t have $70,000 just lying around. But if I did, the devil on my shoulder might be telling me to tool around in a slammin’ new Escalade for a few weeks before telling the disappointed car salesman: “You know, this just isn’t the right car for me.”)

Anyway, you might see this latest effort and think, “Hey, this might bring people back to GM — maybe I should buy some of this company.” And then you see that GM’s stock is at a mere 77 cents per share, so you could conceivably think, “Hey, what the heck? I can get a whole lotta shares for a mere couple hundred bucks. If the company ever comes back, hellllllo Tuscan villa.”

But before you click “Buy,” let me remind you of a quick fact here: General Motors declared bankruptcy last July. The company is currently negotiating with its creditors to somehow get a new lease on life. And that’s not good.

See, when a company goes bankrupt, all of the debt holders jockey for position in hope of getting a piece of what’s left of the entity’s assets. And here’s a key thing to understand: stockholders are always last in line. If General Motors could pay their creditors, they wouldn’t have declared bankruptcy in the first place.

That means that General Motors’ outstanding stock is essentially worthless because it’s quite likely that they won’t even get to the shareholders.

Don’t believe us? Even the company’s website says so:

“Management continues to remind investors of its strong belief that there will be no value for the common stockholders in the bankruptcy liquidation process, even under the most optimistic of scenarios. Stockholders of a company in Chapter 11 generally receive value only if all claims of the company’s secured and unsecured creditors are fully satisfied. In this case, management strongly believes all such claims will not be fully satisfied, leading to its conclusion that the common stock will have no value.”

Still, hope is a tenacious thing, and people apparently have a lot of it. General Motors, which now trades under the sexy symbol MTLQQ, closed last night at 74 cents and traded close to six million shares on the day. It’s hard to believe that in today’s market things could be this inefficient, but sadly lots of uninformed people keep buying General Motors’ likely-to-be-canceled stock mistakenly thinking they are investing in the future of the post-bankruptcy corporation.

If you want to invest in the future of General Motors, you’ll have to wait for the emerging concern to issue new common stock, and knowing how slow bankruptcy proceeding are, that may take a while.

image by cadmanof50s

GM Goes Kaput, Cisco Steps Up

by Carlos Portocarrero, WeSeed Writer

What could General Motor’s (GM) recent bankruptcy possibly have to do with Cisco (CSCO), one of the biggest tech companies in the country?

Three words: In Da Club.

Confused? Well, thanks to GM’s bankruptcy, Cisco is about to join an elite club—one with some serious perks.

Here’s the down low:

• GM goes bankrupt
• News Corp. (NWS) pulls GM from its Dow Jones Industrial Average index (they own it, after all).
• The Dow, which is an exclusive club, suddenly has an opening
• Cisco is picked to replace GM in the Dow and its stock shoots up 5% on the news

Why would Cisco’s stock go up just because it’s going to be a part of the Dow Jones index club?

First of all, it’s kind of like being named “most popular kid in school”—more people will know about you and more people will care about what you do. It’s kind of a prestige thing.

But the bigger reason is that tons of investment companies and funds invest in indices like the Dow and benchmark their performance off of it. To keep up with the Dow, hundreds of funds need to buy stocks in the companies that are a part of it. They do that by buying the stocks that are in the index.

So now Cisco will be a part of the club, and more shares of Cisco will automatically be bought simply because they are now a slice of pie that is the Dow pizza.

Think of it this way: when your favorite unknown band goes mainstream, they’re still the same band they were before. Only now, they’re going to sell a lot more records because they’re famous.

The difference, of course, is that Cisco is not an unknown company. But admittance to the Dow can affect even large companies like Cisco, as the 5% bump in price shows.

Changes in indices like the Dow don’t happen every day, but when they do it’s good to keep your eyes open to see which stock is about step into the spotlight.

See you in da club, WeSeeders.

Introducing WeSeed Today

Ever wonder how the latest news affects the stocks in your portfolio? Well, today we’re launching a new feature that does just that and it’s called WeSeed Today. It’s a daily video that recaps important news from the day before and tells you how it affects the stocks behind the news.

Our inaugural video, hosted by the inimitable Carrie Long and the strapping Jared Levy, is all about GM going bankrupt and what that means to the company, its stockholders, and Americana.

Where Can You Find It?

You’ll be able to find WeSeed Today on the upper left of your portfolio page:

And on the main search page:

Let us know what you think in the comments!

Nike Betters Stock by Socking It to Employees

Photo by Getty Images

by Erica Feldkamp, WeSeed Writer

I’m going to say something so incredibly insensitive that any reader with an ounce of decency should be provoked:

1,750 people are about to lose their jobs, and I believe that that’s a good thing.

Athletic shoe giant Nike (NKE) just announced that they’re kicking 5 percent of their employees to the curb. These former Nike employees will then join the almost 6 million able-bodied Americans who are living without a paycheck.

While it’s hard to imagine how joblessness could ever be a good thing, think about this: If Nike can’t generate enough revenue to maintain its own security in the market, how can it offer any security to any of its employees? By cutting administrative and production costs, companies are able to better maintain the same profitability when sales revenue diminishes.

Who cares about profitability, though, when canned workers have to scrounge to make ends meet? Wall Street does, and so do shareholders, who are probably the same people being laid off. When company finances fall short of stock analysts’ expectations, it’s bad news for everyone. Investors sell their shares, and the company’s cash flow bottoms out as share price plummets.

This is what contributed to General Motors’ (GM) woes—the carmaker was left with no money to float itself when sales tanked. The result? Lots of good people — who spent their lives working for GM and who had built their retirement funds on the carmaker’s stock options — are left in the lurch.

GM didn’t cut its production costs. It didn’t re-invent its product to stay competitive. And it didn’t pare down its labor force early enough. Now every worker in GM is on the brink of unemployment. What’s worse, all the employees who had tied their retirement to the company’s stock are left with shares that are worth barely more than a dollar.

Getting back to Nike, do you think the sole maker has no soul, or is it acting in the best interest of the majority of its workers?