Toyota Stock

I bought $3000 worth a year and a half ago at about $80. It hovered there until a few months ago. I'm holding it, but I'm not buying more just yet.

Nate

 

That stock is good, recently done well, Toyota is a very conservative company, so you'll not get a lot of exitment regarding manipulations and tricks with the stock. But on the whole, the HYBRID market is wide open, and Toyota is making MAJOR moves into it. I have heard that this company plans to make its entire line (or most of it) hybrid, due to the World Wide as well as US market demands. Few other car makers are making such deep commitments, and there are really no other marketable methods at this time. Hydrogen is still a pipe dream, and BIO fuels are not cheap either. As battery technology goes main stream and gets cheaper and better, one cannot see this technology failing anytime soon. PATIENCE is the key, but long term you cannot go wrong with this stock. I have quite a bit of it, and have been very pleased.

 

Personally, I like the stock of Honda Motor (HMC) better than Toyota's.
Reasons:
- Honda has more room to grow. Toyota is already on top (to be 1st this year, 2007).
- Honda has very diversified energy-related R&D. Since energy will and has become a critical aspect of our future. Honda is a better stock to hold on to, long-term wise.
This 1 yr-chart shows that HMC is more stable against TM
http://finance.yahoo.com/q/bc?t=1y&s=HMC&l=on&z=m&q=l&c=TM

I am a Honda-fan. I am biased, of course. But I am not a Toyota-hater, either.

 

With companies that make things, I like to buy some stock of the things I buy - hence some Toyota stock and some Apple stock. With companies (like banks) that make money from charging other people, I like to buy stocks of companies that charge exorbitant service fees (like Royal Bank), which I would never use myself...

 

While Toyota has a low P/E which makes it seem somewhat attractive, it's been trending downward for a year now. I'd rather buy a stock that appears to be on the way up, rather than on the way down.

 

I am confident that in 5 or 10 years time, Toyota stocks will increase considerably. I don't plan to buy T stocks in the near future, but if your in it already - be ready to see some big gains.

 

CAVEAT: I AM NOT A STOCK BROKER.

The problem with buying individual stock is that you are not so much trying to guess the company's performance, as you are trying to outguess the market's assessment of the company's performance. If the market believes a company will do well, it will bid up the price of the stock. This will rob you of the benefit of the company's performance, because you'll have over-paid for the stock. But if a company is under-valued because the market thinks it will do poorly, the market will bid the price down, and then if you buy, you can make a profit.

Do you believe you know better than the market whether company X will do well or poorly? If so, you can make money in stocks. I do not believe any of us can do that.

I own a little over $1,000 worth of Toyota (a very small part of my portfolio) because I like my Prius and I like the idea of owning a piece of the company. (I also own small chunks of a few other companies I like, for emotional, rather than financial, reasons.)

But for investing AS investing, I own mutual funds. The fund managers understand the market far better than I do, and the funds are diversified, so if any one company implodes, it's a small part of the fund. And I own a number of different funds, because each one has its own investing style and philosophy, and reacts to market events in its own way, so I have not only a diversity of underlying stocks and bonds, but also a diversity of investment styles.

I recommend against buying any individual stock as a major part of your overall portfolio, because the company can do great, and you'll still do poorly if the company does not do as well as the market expected it to do, because the market will have bid the price up too high with its inflated expectations.

How you invest also depends somewhat on whether you have a long-term or a short term horizon (young person saving for retirement, or retired person needing present income) and on your tax bracket, and not least on how much risk you want to take. And even on the type of risk you want to take.

Again, don't put money you cannot afford to lose in any individual stock, though a strong company like Toyota is not as risky as a start-up, like Grapefruit Computers (the guy next door to Steve Jobs who built exactly the same computer but got wiped out in the free-for-all of the early days of the computer market.) Maybe Toyota will continue to be the innovator. Or maybe in ten years it will be where GM is now and some Chinese company will be the technology leader. Are you willing to bet your retirement on it?

 

This is how people lose money. They buy high, and consequently sell low.

I just bought 20 more share on Monday morning at 105 a share. A total steal. The entire auto sector has gotten banged up, and consequently TM has suffered. It should be at about 130 a share right now, and I expect to see it pop in the next 12 months.

 

Honda is a good play as well IMO. Problem for them is they are way behind on the drivetrain. They keep telling us that they've got something up their sleeve..... just like the "diesel" Accord that it now turns out isn't happening..... We'll see. Toyota has the HSD..... Nobody else even comes close right now.

 

If you know little to nothing about the market, invest in an index fund over the long haul. 93% of mutual fund managers will NOT outperform the market (when you account for the fees as well), so it makes sense to do this.

If you know something about stocks and are willing to do your research it is worth your time to invest in individual stocks and it's the best way to outperform the market as a whole. Diversification is good for "know-nothing" investors b/c it takes out the risk ... a sort of way of locking in a return (not that one can ever do so). It also reduces your likelihood of ever beating the market ... which should be the goal I guess since otherwise (as I've pointed out above) you can do better than almost all mutual fund managers by just investing in the S&P 500.

Just my little $.02 ... I'm freshly out of a grad class I took -- "Warren Buffett Investment Principles and Equity Asset Valuation".

In general I would stay away from auto stocks ... doesn't mean they won't do well, but in general I think you can find much better places for your money.

 

While generally I agree that you should buy low and sell high, the problem with thinking that way is that you never really know what low is. There's a tendency to think that a stock that's been falling for a while has hit "rock bottom" and is a buying opportunity. But no matter how low a stock is, it can always go lower. I'm not saying that this is the case with Toyota--I'm just saying that all other things being equal, a stock that's going up is likely to keep going up. A stock that's going down is likely to keep going down. (At least, it's more likely to keep going down than to suddenly turn around overnight.)

 

Well I'll leave you to your opinion then.

All you can do is look at the value and structure of a company. Toyota has had nothing but steller results this year, yet they're down 20 some odd percent. The auto sector is down about 25% during that same time.

Emotion selling.

Look at Toyota's fundamentals and you'll see the largest most profitable auto company in the world, that is going to have a record year in both sales and profit, yet its stock has bled 20% during that same span.......

Hmmm.....

Me thinks we've got a good value here.....

TM is up 2.5% since buying on Monday.

As to your point in terms of a stock that is "going up" is more likely to go up versus one that is "gowing down" is more likely to fall.... Well that isn't true either. The second the bell rings every day a stock can either climb or fall depending on demand. 50/50

Now if a stock's been climbing because of results or falling because of RESULTS then you may have a point. But when a company continues to dominate yet their stock bleeds, then you have what is called a Value trade. Toyota at 105 was like stealing. I think Toyota at 130 is still a fair play.

 

Index funds are good, and I include them in my portfolio. But since present income is my goal, not saving for the future (I am retired and living off my investments) I would not go with 100% index funds. And since I have no interest in spending all my time researching stocks and trying to second-guess the market, I have a very diversified portfolio that provides me the income I want. If there is not a general economic collapse I am set. If there is a general economic collapse no investment strategy other than hoarding canned food is going to do you any good.

(Not quite hoarding, but when I lived in rural North Dakota I always had at least a two-week supply of canned food and drinking water, since you never knew when a blizzard would block you in, or a power failure would leave you without electricity (and the two often went together).)

Toyota and Honda are both good solid companies that belong in anybody's portfolio. But nobody's portfolio should be limited to just a few stocks, and mutual funds are the way to spread out your risk. And I probably would stick to index funds if I didn't have much to invest and my goal was building a retirement fund rather than spending my money.

 

You are correct when you are looking for income for retirement ... excuse me for being so single-minded when talking about the future ... I'm young and don't worry about income-producing stocks.

Again ... only true if you are a "know-nothing" investor (this is Buffett terminology). The way risk is TRADITIONALLY measured ... that makes sense, but risk as measured as taught in schools isn't always the proper way to think b/c it's measured by how much prices change. Like I said ... if you are into researching, etc ... you SHOULD invest in fewer stocks. It is RISKIER in a diversified sense, but it is not riskier b/c you are thoroughly researching what you are planning to buy. Like I said above, owning FEWER stocks or focusing your money in fewer stocks is the way to go in order to beat the market (if that is your goal). Warren Buffet has 80% of Berkshire's market value in 7-8 companies.

 

The problem with thinking that research will allow you to beat the market is that so much of a stock's value is governed by the market's perception of the company, rather than by the real value and earning potential of the company. In the long term that doesn't matter so much. If you had bought Apple or 3M at the beginning you'd be a billionaire today. But if you're speculating, buying and selling to take a profit from the ups and downs, there's a big element of gambling in it.

I don't need to "beat the market." And I don't care about the normal ups and downs in the prices because I'm not buying and selling. I bought a diversified portfolio that provides me with an income, and which I expect to spend down gradually.

I do not believe that anybody who does a little research can get rich in the market. Some will get rich and others will lose their shirt. But you can establish a portfolio diversified enough that over the long term your savings grow faster than a bank account.

Warren Buffet made a lot of money. But for every Warren Buffet there are a thousand who got wiped out.

 

Time and time again it's been proven that you can research and beat the market ... most don't have time/willingness/or patience ... plus you have to know what you're doing. If you research companies thoroughly and buy stocks below their intrinsic values and have a long holding period, you can beat the market generally ... of course this isn't easy, but what you're talking about is a strong form of market and it's been proven that you can make money off of research. Of course you are dictated by what the market perceives the stock to be worth, but if you research and choose wisely you will buy stocks that eventually everyone comes around to with their valuations and it will grow price-wise. If the fundamentals are there, almost always the stock will follow whether people believe it to be worth it or not.

 

My point isn't you SHOULD want to beat the market and ONLY that ... the point is that if you don't rely on dividends for income, there isn't really any reason to buy anything other than an index fund over the long haul ... especially if you are "younger" (i.e. not nearing retirement anytime soon). Like I said lots of research has been done and only 7 of every 100 mutual fund managers beat the market. Lot less fuss to buy an index fund.