Thread regarding AT&T layoffs

@ocx, you are partially right. Berkshire Hathaway (Warren Buffet) had bought Direct TV shares in the $40s, AT&T bought the company for $95 per share, some in cash and the rest in stock. Berkshire off loaded T over two consecutive quarters for only one reason, Berkshire Hathaway’s mandate is to purchase “undervalued stocks.” When a stock no longer meets that designation, they sell it...T was an automatic sell for that reason.

@ato, you come across as a crusader who has read many other articles about AT&T and have adopted them into your own thought process. You speculate, “if the credit market gets funky,” what does that mean?

“Usually when a stock yields over 6% it means trouble.” Why? You speculate but give no reasoning.

“Heaven forbid if AT&T ever gets cut to junk” etc. etc.. That’s the total obvious when the mere obvious will be suffice!

Though most of your disjointed manuscript is obvious, general speculation, I agree with your thoughts of not being a portfolio watcher on a day to day basis.

Having said that, it would be better to suggest to people to get their own Certified Financial Adviser, for advice, than to rely on a person from a formerly failed firm like Lehman Brothers, perhaps the ‘Father of our Great Recession.’

Praying 4 .DeathStar .. please GOD, help us!!

Holding a stock because it pays a dividend while it declines in value is a losing strategy. Your money isn’t really “working” for you- you are slowly draining away your capital by holding the stock- even if it is paying out dividends.

This stock is what is known as a dividend trap. S---ers are drawn to the high dividend yield without considering that there is a very good reason this company's stock is priced so low.

Warren Buffet was a major shareholder of Direct TV stock. When AT&T offered him a 30% premium to buy out his position, Buffet gladly accepted. Then on the day the takeover went through, Buffet IMMEDIATELY began liquidating his AT&T holdings.

If the greatest investor in the history of capitalism won't touch this stock, why would anyone else?

I don't get it, why is that people has to own AT&T stock? it seems to me that the risks do not outweigh the benefits, worrying about company books, you should be worrying about your nest egg, there are Many other investment instruments out there. WISEUP

And...... shareholders are screwed, they may not want to complain too much about the company’s efforts to reduce debt. If it doesn’t, the ratings firms might signal that its rating could be downgraded to junk. And with such a sizable debt burden, the company would likely cut its dividend before it was downgraded to junk—an event that would be bad news for shareholders.

Don’t fall into this trap.

AT&T could be next

Speaking of stocks that are in trouble, some people started pointing fingers at AT&T T, +0.07% . (Full disclosure: I own a small amount of AT&T. I have held it in a UGMA account since I was literally eight years old. A widow-and-orphan stock, and I was an orphan. It’s not much. Now I am thinking of launching it.)

Anyway, AT&T has $181 billion in debt. It’s easily the most indebted company in the U.S. (and possibly the world), adding lots of it with its recent misadventures into media and entertainment. The stock yields 6.5%. And I’m sure some people think that’s a great dividend yield.

Actually, that is not a great dividend yield. Usually when a stock yields over 6% (unless it is a REIT or a t-b-cco stock), it means trouble. So this is how the story goes.

There is a lot of corporate debt out there. And if the credit markets get funky, people will go after AT&T first. I assure you that will happen.

My prediction is that AT&T will one day be in the same predicament as GE. That dividend yield is not so safe — they will have to cut it to make interest payments on the bonds. But that will not be enough, and asset sales are next. Hard to pay back $181 billion in debt.

Heaven forbid AT&T ever gets cut to junk. That will be a day to remember in bond market history.

Use your freaking imagination. If I told you even a year ago that GE and AT&T could cease to exist, you would have said no way. Way. Throw in Sears and some other old-line retailers, too.

It is an achievement for a company to last 100 years. It is hard to last much longer than that.

Here’s the lesson

The lesson here isn’t to dive into your brokerage account and sell your own stocks. The lesson here is that you should exercise a little brain power and long-term thinking.

I spend a lot of time telling people not to fool around with dumb stuff like bitcoin BTCUSD, +10.10% and pot stocks. It’s also worth telling people not to screw around with stocks that are like an anvil on a glide path.

People don’t sell these stocks because they are afraid that they’ll sell the low and the stocks will pop back up. They are trying to minimize regret. It’s probably not the low.

If we have a bear market and a recession, there will be more stories like this.

Actually, the worst part about owning a stock that goes to zero is that it then goes to the Pink Sheets. At that point you won’t be able to trade it. It just sits in your brokerage account and mocks you when you pull up the screen.

Then it really will be pointless to sell it, because you’ll get something like a dollar.

I like to make fun of trend followers, because they say things like, “I buy the stocks that go up, and sell the stocks that go down.”

Trend followers are simpletons. But there is a weird sort of wisdom in a statement like that. You really should sell the stocks that go down.

I’m a proponent of not staring at your portfolio on a daily basis, but I recommend checking in fairly regularly to make sure everything is OK.

Jared Dillian is a former Lehman Brothers head of ETF trading. In a special report, he writes about how to properly position your portfolio for what he says is an upcoming stock market crash.