|Buy the stock or a lottery ticket?|
|Company||52 week range||Price on 4/3/09||My Decision|
|AIG (AIG)||0.33 - 49.50||$1.14||Lottery ticket|
|Citigroup (C)||$0.97 - 27.35||$2.85||Lottery ticket|
|Fannie Mae (FNM)||$0.30 - 31.67||$0.70||Lottery ticket|
|DryShips (DRYS)||$2.72 - 116.43||$5.25||Flip a coin|
|Bank of America (BAC)||$2.53 - $4.65||$7.60||Flip a coin|
|General Electric (GE)||$5.87 - 37.90||$10.94||Flip a coin|
|Ford (F)||$1.01 - 8.79||$3.25||Stock|
|Alcoa (AA)||$4.97 - 44.77||$8.17||Stock|
|Dow Chemical (DOW)||$5.89 - 43.43||$11.00||Stock|
For reference, in the lottery game Mega Millions, the chances of doubling, tripling or winning 10 times a bet are 1 in 75, 1 in 141, and 1 in 844, respectively. In addition, there is a 1 in 175, 711,536 chance of winning a several million dollar jackpot.
In summary, I have very low confidence that AIG, Citigroup and Fannie Mae will recover sufficiently to significantly increase the value of their stock. Thus, buying a lotto ticket offers more return, less stress and more fun :-) For DryShips, Bank of America, and General Electric, I think there is a slightly better chance for recovery than failure. Finally, for Ford, Alcoa and Dow Chemical, I believe there a reasonable chance these stocks will recover when the economy recovers. If the current rally reverts into a market decline again, I will consider buying small positions in these stocks.
Disclosure: At time of publication, I own shares of General Electric and two lottery tickets.
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This is not financial or investment advice. Please consult a professional advisor.
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