The Tech Stock Investor

The big news of the day comes straight from the House: the $700 billion dollar bail-out has been deep-sixed. Does this mean the light of reason is shining in Washington? Hardly. Probably even less so now than ever before. The American people work hard for those tax dollars. Giving them away to bailout institutions which have made stupid moves in the market is tantamount to highway robbery.

Did the American people create this disaster? A small fraction of a percent did. It’s the rest of us who are being asked to pony up a lot of money to repair the problem. What do we get for it? Nothing, with the possibility that this money may not even fix the problem at all and the bailout money may only delay the inevitable: the collapse of a number of institutions, huge sell-offs and who only knows what else.

There is an old saw that says those who can, do, and those who can’t, teach. I say we need to revise it: those who can, do, those who can’t, run for political office. Some of the sharpest financial minds in the world work on Wall Street. Some of those minds helped create this mess. Now some politicians think they can out smart the geniuses and fix a mess they know little about. Maybe it’s just me, but when the car breaks down, I don’t go to my local commissioners for help. I go to a mechanic. A lot of times I go to several to get a good deal. Now we have a few “economists” and “experts” advising the Bush administration (fountain of wisdom that it is) to bail-out the industry. I have heard dozens, if not hundreds, of experts on radio, tv, and the interweb saying this is a huge mistake.

A lot of the experts agree that the market should be free to move as the chips fall. If these same companies were making windfall profits they would not be in Washington trying to share it with the American people. Why have privatized profits if we are going to have socialized losses? Others argue that these companies are too huge to allow them to fail. Why the hell are we letting companies get this big? Maybe it’s time to limited company size. If you want to grow bigger then spin-off some divisions into other public companies and move on.

That’s my rant for the week. Thanks for listening and thanks for being patient. I have been offline with some personal issues for a while now but I will try to post a little more regularly from now on. Contact your local Representative and sound off. Let them know how you feel. Feel free to share your thoughts, rants, and other ideas in the comments.

As Ford continues to crumble in domestic markets and fights to stay alive in the world market, investors continue to punish the stock price. Ford has been fighting a losing battle for several years now. Facing everything from UAW contract fights, economic hardships, and even negative publicity for its continued stance in the controversial support it provides to Gay and Lesbian organizations.

The company recently signed new contracts with the UAW and has been selling plants and other assets to meet expectations. A plan to build a new plant in North America seems to have been put on hold or abandoned altogether, and the planned sale of Volvo has been scrapped since a buyer will not likely be found.

A recent scan over the number for the company at Reuters was very eye-opening. As I glanced over the ratios listed I could not help but notice something: a number of them had “NM” instead of an actual number. “NM” generally means “Not Meaningful” of course, and that pretty much sums up the action at Ford. Dividend Yield, PE Ratio, and 5 Year EPS all reflect this along with a number of the other ratios.

It’s pretty sad for Ford (and its employees) to see things going this way, but maybe management can get things back on track before shareholders decide to issue some pink slips. Of course, with the way this company has been run into the ground, pink slips may not be such a bad idea.

GM has been in decline for a long time. In the scope of corporate life cycles, GM may be in the final decline. Getting hammered in the domestic market, the world’s largest auto maker was outsold by Toyota. An aging workforce, huge pension debts, and UAW woes have all but ruined the balance sheets and it still faces four more years before nearly half its hourly workforce will be retired.

Now if a $39 billion tax related loss in the news is not even enough to kill share prices more than a few percent, nothing will. This is not the first time GM has had to declare losses in this industry and each time, they have dumped their losses, watched share prices dive only to come back in the ring swinging. I do not think that will be the case this time. Sure, a fighter may come back into the ring with a few final gasps, but most of them do not make the big comeback. GM will probably be the same. They will shed more divisions in fire sales and spin-offs, maybe even do some more cost-cutting (which seems to be a never ending battle to begin with), but after all is said and done will GM still be the same company?

What can be said of a company who has been outsold in their own domestic market by a foreign competitor? Then GM has the guts to compete with the Asians in their own markets? I think its time the GM management and the US Congress think about this: come back home and work on getting things straight here and let the world worry about its own problems.