Auto Stock: To Buy or Not to Buy?

I heard an interesting soundbite on the way home that got me thinking. The Governor (maybe) of Michigan said something to the effect that all her kids are getting auto stocks for Christmas. I mean, they're likely not getting any cheaper, and it's a pretty safe bet that they're not going to collapse (okay, maybe not such a safe bet with Chrysler), so it seems like a good buy, right?

Bear in mind, I know nothing - no, let's call it less than nothing - about the stock market. So speak slowly, and in small words.

Should I ask Santa to stuff my stocking with US automotive stock?

Ford is the safest bet, plus it is lower than GM. Chrysler is privatly owned, so as far as I know, you can't go buy some of that. Get it now before they most likly bounce back a little after the inevitale loan goes thrue. I have been playing with the same idea, but I just dont have the money to spend.

If they go into bankruptcy... I hear it's pretty common for companies to liquidate shareholders' stock in order to pay off debt to vendors and others, essentially making stock investments worthless at that point. Even with a bailout, a turnaround doesn't seem on the horizon.

Sounds pretty damn risky to me...

I'd say the possibility of them going bankrupt is still large.

That Kramer (Cramer?) dude says to stay away from these stocks....

No offense, but berkeley Jim Cramer. He has been consistently wrong about everything leading up to this point. He seems to think that since he can't be the smartest guy in the room, he needs to be the loudest, and I find that beyond annoying.

Is the general consensus that there really is a chance that Ford and GM will go bankrupt and collapse, or is that just fear of a potentially ugly outcome influencing rational decision making? It seems to me that this first bailout offer was nothing more than chest-puffing in the early stages of the negotiation, and a deal is likely to be struck. I certainly don't want to put my faith in the UAW or the Republicans in Congress (no flounder intended, I swear), but it strikes me that neither of them are actually willing to let things go all the way down the toilet, even though they may be posturing that way at the moment.

And, as Warren Buffet said, it's best to be fearful when others are greedy, and greedy when others are fearful. This seems to be one of the latter situations.