Hi,I am moving more into cash and away from eqities as retirement is imminent.Am interested opinions about BankOne (ONE) stock as a virtual cash equivalent for a long term retirement holding. At present it is paying about a 6% dividend. The company stock is really beaten up, but nowhere near anything like bankruptcy or insolvency, no really threatenting legal action, like MO.Opinions sought. I am thinking of chuncking down a sigificant piece of my CD/MM cash to buy this stock. It looks to me like a great income source with significant upside potential if held into retirement. I am glad to get 6% from Money Market and CD funds.What do you think?Bernie
I don't think too much of this plan. You are moving into cash to protect some of your assets and then you want to invest in one stock. This seems to be a contradiciton. If you want safety, invest your cash reserves in a money market or short term govenment bond.
Perhaps I was unclear. I was thinking in terms of substituting one cd or even two,(of a ladder of cd's). I could also use it as part of stock allocation which is about 60/40 favoring cash and bonds.bernie
It might be good for a small portion of your stock allocations. I would not invest more than 5% of my stocks in any one thing. I also would not invest all at once. If I was going to invest $10,000 I might invest half and see what happens. If I was going to invest more than $10,000 I might divide the money into thrids. This market is so volatile, I might want to keep some money on the side so I could buy on the dips.
Hi again,You motivated me to figure out the numbers exactly and I was quite amazed. I have been keeping funds out of the stock market, as I believe it will be declining and hope that decline is orderly. It is just self-evident that current growth can't be sustained. Mr. Greenspan said as much on Tuesday.I had just bought $200K worth of CD's and none could compete with this rate of return. So I bought a thousand shares of ONE, and in my mind it is a cash equivalent. The purchase amounts to about 3% of my portfolio value including cash and bonds which are 58%. At the price I bought (a little over 25), the return, given present and historical cash dividend yields, is 6.72%. Obviously, this isn't guaranteed in the same way a CD is, but it looks like a pretty safe bet. I looked for any reason to think that dividend rate might change. Current or projected revenues just don't point that way, nor would there be any reason for the Board of Directors to give up their best selling point at this level.The directors did eliminate the stock dividend, but that seems logical. Why dilute shares further when price is so depressed?This stock is amazing. It is selling at bankruptcy prices, yet it has very good earnings and assets. I guess I think it is the flip side of the mania at the other end of the market, where stocks are valued at 100's of times earnings (if there are any earinings) and growth is everything. I think there are going to be lots of bottom feeding opportunities and my priority is having the cash to go to the trough. BankOne is a superb example. I expect it to grow, but I really don't care as I am interested in cash returns (I am semi-retired, likely to be completely retired soon).Good luck to you. I have no interest in this stock except as described above. I thought other retirees might be interested. I had to have it pointed out to me by a friend.Bernie
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