Don’t get all emotional on me
Today's Financial News - Posted December 30, 2008
When the economy is in the gutter, investors need to be on their game. That means avoiding emotional investments at all costs. Unfortunately, Sirius XM Radio (NASDAQ:SIRI) investors are not following this wise advice.
By Andrew Snyder, TodaysFinancialNews
Baltimore—(TFN): One of the most important rules of investing is to never get emotionally involved with your portfolio. Your positions must represent fundamentally sound companies with a strong potential to generate positive cash flows and growing earnings.
Unfortunately, too many Sirius XM Radio (NASDAQ:SIRI) investors are not heeding this advice. They have their hearts tied to the failing company and are paying desperately as Mel Karmazin rides the company into bankruptcy.
A quick glimpse at the comments following nearly every columnist’s bearish thoughts on Sirius prove my point. Judging by the amount of name calling, twisted facts and just plain lunacy present on so many Sirius-based message boards, it is obvious tensions are high and hopes are dim. Either that or fifth-graders are investing more than ever.
Let me get you a tissue
Unfortunately, with the value of their shares down to just $0.12, it is too late for many Sirius investors to find a path towards profitability. After all, when you are down 95% on the year, what is another couple of percentage points?
To blame the company’s problems on anything but poor capital structure, a weak management team and an upside-down business model is ludicrous.
Short sellers, analysts and hedge funds did not drive Sirius’ share price to where it is today. Instead, a lack of liquidity and huge amounts of dilution are taking money straight from the pockets of once-loyal investors.
If you want to make money off of this company, your best bet is to sell. Sell your satellite radio receiver on eBay and unload what is left of your shares. Both of them will be worthless soon enough.
Converting debt into worthless stock will do nothing for current shareholders but dilute their positions even further. Why do you think Moody’s just cut the company’s rating another notch? It was not because the rating agency thought Howard Stern was not funny.
If Wall Street thought the company had a viable plan to get rid of its billion-dollar debt load, shares would not be plummeting.
Sirius is a trap that emotional investors are pushing each other out of the way to fall into. Do not join them. Wall Street is no place for emotions, especially in this market.
Next Article: Pie in the Sky and Lowered Expectations
4 Responses to “Don’t get all emotional on me”
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December 30th, 2008 at 1:09 pm
I just purchased 100000 shares at 0.1167. I will let you know next year who is the better financial prognosticator. I bet I win.
December 30th, 2008 at 4:10 pm
Next year there will be no XM, siriusly.
January 2nd, 2009 at 4:19 pm
Well you are the one who seems ‘emotional’. You say the management is bad, so on what do you base this? The stock price? Then a lot of Boards need to resign. You say sell your receiver? They are adding subscriptions in a recession, and revenues are up double digits in Q4. Even in a BK the company will survive, I don’t think anyone has said otherwise. At this late date NO analyst is predicting a BK, so whose ‘bearish’ comments are you listening to?
Just asking Andrew, and while I am at it, what is your background? Have you been successful with your portfolio in 2008? It seems there are no ‘facts’ here just ‘opinions’. In your next article explain your assumptions. Show that you have read the 10Q and recent 8K’s. Until then, I guess I will just keep my ‘emotional’ shares. At 62 I suspect I have been investing longer than you, and yes successfully, so you will forgive my skeptical view of this blog post with no data to support the opinions, or a bio for the author.
January 5th, 2009 at 1:16 pm
A quick bio for Andrew Snyder can be found on our Stock Experts page: http://www.todaysfinancialnews.com/stock-expert.