NEW YORK (TheStreet) -- My recent articles on "sucker stocks" generated a wee bit of angst among the various peanut galleries. The upshot: Some investors require mental-health counseling. I will address the relatively unstable later. For now, I focus on two auto stocks I would not touch with your brokerage account.
. Despite including bearish remarks about these two companies in the same breath, I want to draw a key distinction between Ford and GM.
If any of the major automakers rise to the surface of one of the world's most difficult industries, it would be Ford, not GM.
Ford organizes areas of its company like a start-up. For example, the groups in charge of the company's in-car entertainment push work in small teams. They're young, tech-oriented people. They do not work for a car company, they work for a tech company. At least that's the mindset.
They would not look out of place in the halls of perpetual start-ups. In many ways, Ford is a bit like
. Stodgy old industry behemoth
because it knows that that's the only viable way forward.
At GM, meantime, executives portray a confident exterior, while you know full well, chaos reigns on the inside. Instead of truly taking a look at itself in the mirror, GM took the
and socially acceptable route and blamed
for its ineffective advertising campaigns. And then, as any truly psychologically unstable being would do, GM blamed another external force for its woes --
Huh? I would not touch GM with my worst enemy's brokerage account. As for F, I would not touch it with your brokerage account. And that's because we get along.
At day's end, the lower the P/E ratios go on GM and F, the more bearish I become. I refuse to fall into that value trap. Wall Street has no confidence in the mass-market automakers' ability to sell cars with so much uncertainty in the air. And there's no guarantee that when the dust settles, GM and Ford will emerge as leaders.
If I had to put my money in one of the two stocks, it would be the more forward-looking and truly confident Ford, but I'm a long way from jumping back in it.
We can learn something from
. The stock soared from pennies to near $2.50. F enjoyed a similar run; in fact, it's up about 600% from its November 2008 lows. And that's even after 25% worth of weakness over the last year.
When a stock runs like that, it makes a bunch of people wealthy. Maybe they bought at the bottom on a lark, as a lotto ticket, or because they followed well-thought-out bullish conviction. It doesn't matter. All's well that ends well. But, just because it happened to somebody else does not mean you're entitled to have it happen to you.
Investors who search the floor for multi-baggers, rarely find them. Like most good things in life, they happen to you when you least expect them.
After reading my
other sucker stocks piece, which includes the likes of
, a contributor at
emailed and directed me to his article that touts Build-A-Bear, in standard Peter Lynch fashion, as a "multi-bagger." I suggest he re-read the preceding paragraph.
And, of course, the Sirius XM rescue corps crawled out from under their respective rocks as per normal, shouting insults and making inane and unfounded allegations. Consider the following comment from a user who calls himself "JESSE NASH":
... The only reason a person writes so many negative articles about a particular company is if you are being paid to do it. The powers that be at The Street have to approve each story ... yet they publish every one of them. If this does not wreak of an agenda here, I don't know what does? What I'd like to know is WHO is paying you to do this? ... WHO IS BEHIND ALLOWING YOU TO WRITE SO MANY NEGATIVE STORIES ON SIRI? Jim Cramer perhaps? It is his company right? Time to come clean here.
Yes. You've cracked the code, Detective Columbo. The single biggest name in financial media, Jim Cramer, who has nothing else to do all day between appearing on
, conducting his
television show, providing articles and video to
and running his
, participates in an elaborate scam to grease a guy working from his home office (bedroom) in California to talk down a stock that's doing a pretty fine job of imploding all by itself.
The article --
-- even prompted Sirius XM's official
account to follow me. That's cool. In these modern times, they no longer have to bug my phone line or orbit one of their satellites above my house. My articles and my social media accounts tell you pretty much all you need -- or would care -- to know about my life. Quite depressing.
In any event, the reaction to articles about "sucker stocks," which often double as
, pretty much reinforces the points I make in the articles.
Passion and emotion rarely produce positive outcomes for investors. The subject -- individual investor psychology -- does not get nearly enough attention. We really need to open up about it. It should come as no surprise, however, that we do not. As a nation, we're reluctant to foster open and honest discussions about mental health.
That's really what investor psychology comes down to. It's a mental health issue. It's about experiencing an emotion and then handling your reaction to it. Do you discount it? Do you rationalize it? Do you ignore it? Do you filter it? Do you laugh it off?
These are the questions my therapist used to ask every time I reverted back to the same old behaviors.
Rocco, there you go again. Discounting. Rationalizing. Ignoring. Filtering
. It made me so mad I wanted to flip the couch over. But, I finally faced it, he was 100% correct.
Investors who invest in dead-money stocks like SIRI or stocks with sexy ticker symbols -- BBW -- need to face this reality as well. If you're a mental health professional, there's a hole in the industry for a practice that specializes in dealing with investment-related psychological issues. In fact, you could fill an appointment book just by marketing to longs of Ford and GM.
At the time of publication, the author was long FB and MSFT
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
At the time of publication, Pendola was long FB and MSFT.