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FirstEnergy Corp. Message Board

  • wizbudd wizbudd Jul 17, 2010 8:15 PM Flag

    A HARD LESSON LEARNED...............

    In April of 2008, after a long conversation with my financial advisor, I decided to purchase some stock in FirstEnergy Corporation, my financial advisor told me that you really can't go wrong with investing in a utility company that pays a pretty good dividend, he told me that utility companies are "recession proof".

    So, on April 21, 2008, I purchased 500 shares of FirstEnergy at $71.21 per share, the stock quickly ran up to $75.00. I decided to purchase another 1,500 shares at $75.80 for a total investment of $149,305.

    Today, my total investment is worth $74,380, I've lost over $75,000, and most days I'm sick to my stomach just thinking about it.

    I really need help with this situation, please help;

    1. Will this stock ever recover?

    2. How will the merger affect this stock? Good, Bad, indifferent?

    3. Is the management team really a bunch of stupid motherf'uckers?

    4. Is the company actually run by stupid, uneducated redneck hillbilly's?

    Thank you in advance.


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    • I know little about FE but a lot about uts. The mgmt of FE is certainly overpaid. They should bring in a new team and pay them a third as much as the current mgmt. can't seem to get it right. You are not the first nor the last player to get burned in the stk. mkt. It is buy low, sell high and spread your wealth around various, high quality co.s

    • wizbudd

      I sympathize with your situation on FE. In the past I have relied on others to assist me in making investment decisions. But the results were never as I had anticipated they would be. Sometimes I lost money. Sometimes I broke even. But rarely did I make money.

      One day I decided that trusting someone else with my financial future was not working out very well for me (it usually worked out fine for my financial advisor and his fees). Then I made the best decision of my financial life. I decided that NO ONE CARES MORE ABOUT MY FINANCIAL SITUATION THAN I DO! And I decided that I am smart enough to figure out how to invest intelligently. Up to that point I felt that I did not have the time or inclination to learn how to do my own investing. But I finally decided that I can't afford not to find the time necessary to do my own investing. How can I trust my financial future to someone who I know little about and who is definitely not motivated to insure that my financial future is sound and well planned.

      That was about 8 years ago, and it has been a long and sometimes rough road but I am now an informed intelligent investor and am reaping the rewards of my time and efforts. My portfolio has never been in better shape (inspite of the crisis over the last 2 years) and my returns are impressive and getting better every month. I am about to retire and I can assure you that my lifestyle will be far better than if I had trusted someone else with guiding my investments. My only regret is that it took me so long for me to decide to take control, and not let someone else do it for me.

      I am not an investor in FE and just happened on to your post in the process of doing some research about FE. I only stopped long enough to make this post because I have been where you are. And it is not a nice place to be. But it is not the end of the world. My advise is to either take control of your financial life or buy CD's. It is about that simple. Anything less puts your financial future at unacceptable risk levels.

      Good luck.


    • Sorry to hear your losses.
      To regroup your losses:
      I would recommend going for integrated oil stock like XOM.
      Oil like utilities are at BOTTOM of cycle.
      2-3 years from oil will be back to $100-150 per barrel,
      XOM will close to $90-100.
      plus it will pay you dividend to hold.
      I have serious doubt FE will be back to $70 range for next 10 years

      • 1 Reply to raman_ds
      • The problem with your comment is
        even the best of the best stock
        analysts who understand the market
        and the economy would never go on
        a limb and predict that the stock
        will not rise to 70.00 in ten years.

        If you had a watch on this market yrs
        ago you would have seen a 30 to 80
        rise in several who is to
        say and how are we ever going to predict
        an economy 10 yrs out???
        Oh, by the way, at a price of 70.00 per share
        with the current div.
        the stock would be paying at a rate of 3.14%
        You cannot get this % anywhere today without
        taking at least noderate risk...

    • Utilities use to trade with interest rates till the last 10 years or so. Then the utilities traded as somewhat a growth stock, which now due to the slowing economy they no longer are. What they are now is a somewhat safe investment that should continue to pay a divi. I would be careful in putting to much capital in one thing. I was a little heavy in the BDC sector and lost big but that is my fault I did not limit my exposure to less than 10% of my investments. Right now the only plce you may have a chance to at least have some increase in income is in the pipeline companies, like ETP, EPD, PAA, SXL, WPZ. They have pulled back recently and may be an opportunity to buy. The way you have to look at FE is that at least they still are paying a divi, and if the economy recovers so will the stock price.

      • 1 Reply to darnoc1111
      • Utilities traded like growth stocks...but not because they were growth stocks...
        It was all about techinical traders...pumping up and then deflating down...One
        could never get a true value of a co. with the stock price because the casino (Wall Street) determined the face value of the stock and hardly did it ever reflect the true value of the co.....Always remember this; Wall Street does not make it's money on buy and hold mentality...So to do away with buy and hold metality...they will shake any stock to get investors nervous who are holding for a long time to sell and others to jump on the bandwagen for a short time to make a quick profit...They make their money on commissions and the ever so important spread...This mentality has also played a minor role (booms and busts) in the situation we have today regarding our economy...There is little stability in the markets why would anyone who wants their dough preserved us this vehicle as a stable investment strategy is beyond me.......

    • Why did this stock fall so far from the 75 dollar level? Was it all because of the finacial crisis or were there other reasons? Many of the utilities have regained some of their losses because of the dividends, I uised to own Duke energy but got tired of of the overpaid CEO and all the spin offs that mainly benefitted upper management and wall streeet bankers I like what i see here because of the dividend any thoughts?

      • 1 Reply to gatsbyrising
      • Clearly your fault.
        Investing is a game, one has to know the rules to succeed in this game.
        Market isn't a field of dreams with money trees growing on it - it's a chessboard.
        You had the money, but didn’t know the rules.
        There’s no way an experienced market participant could lose money on FE even during the slump.
        Read the books, learn about options, learn about hedging and then come back.
        Otherwise you will remain a gambler, not an investor.
        AMEN TO THAT. No excuse to ride this stock down from $75, none at all. And he should fire his broker immediately.

    • Thanks for all of the useful feedback!

    • Clearly your fault.
      Investing is a game, one has to know the rules to succeed in this game.
      Market isn't a field of dreams with money trees growing on it - it's a chessboard.
      You had the money, but didn’t know the rules.
      There’s no way an experienced market participant could lose money on FE even during the slump.
      Read the books, learn about options, learn about hedging and then come back.
      Otherwise you will remain a gambler, not an investor.

    • Well, you have to look just not at the CURRENT yield, but YOUR yield-to-cost. A lot of people miss that.

      If you bought FE right this second, your yield to cost would be 5.71%. If the stock rallies, the current yield would go down, but your yield to cost would be the other words, if you buy it for the yield, the underlying price is irrelevant once you have taken your position. You use your dividends to buy more the stock (DRIP), which increases the dividend. Where current price matters with this strategy is in the timing of the incremental buys....

      Trading high yield stocks is stupid. If you want to trade, buy/sell the SPY or any SPDR. It is a lot more liquid than FE and you can get in and out easily.

      Please read my last post. It is looking better by the minute!

    • All of the posts under this topic are good.

      So right now you own 2000 shares at average cost of $74.65.
      The stock pays $2.20 per year in dividends, giving you a yield-to-cost of 2.9%. That is not God-awful as the 10-year Treasury is paying only a little bit more than that.

      The stock here looks good. So you could buy say 200 shares at a time around here ($37.79). Let's say you did that.

      2000 @ 74.65 plus 200 @ 37.39 = 2200 @ 71.65....That would boost your yield-to-cost to 3.07% and reduce you average get the idea...

      You may be able to dollar-cost-average your way out of this slowly....

      Another thing you could do is sell some now at a loss (particularly if you have gains elsewhere) and replace with another utility stock which is also down (they are all down)....

      You might take a look at PPL, e.g.....

      Good luck....

    • It is not possible to predict the recovery or lack there of, of FE. But now you know, 1.) never let anybody else take care of your money unless you are still living with your parents, then you can let them take care of it. 2) Never put all your eggs in one basket. 3) have a concrete 'line in the sand' where you know your trade is not going well and GTFO. 10% loss is usually the max you ever want to lose. 4)You still have 75,000. Your trade starts here and now.

      • 1 Reply to sharppolly
      • PS: when you put your money in a stock in a 'buy and hold' attitude, you are letting the management of the company take care of your money. as you are finding out as i have, they are usually concerned with golden parachutes and pocketing bailout money and not so much about your investment. Not saying FE management are anything but law abiding citizens, but it is obvious there is very little policing of the corporations these days, JMHO.

        Good Luck

        disclosure: not long or short, but looking to buy a little bit.

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