The Tech Stock Investor

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.

General Motors was once used as faithfully as the DOW as a barometer for the entire US economy. If GM dipped so followed the market. Lately, GM has suffered from several angles. Earlier in the year, GM was outsold by Toyota. This was the first time the company had been outsold globally, albeit by a narrow margin. Mounting health care costs and a beneficiary burden (which some estimate at 1 worker supporting 2.6 retirees) is slowly grinding away at GM’s ability to compete in North America.

GM’s other woes have usually followed prolonged strikes by labor unions. This has led to reduced sales and crippling some operations for weeks at a time. Management has cut jobs, closed plants, and done everything short of merge with another company to prevent the continuing crumble of the company. A preliminary agreement seems to have been met today and it looks like the strike may be over very soon. This pushed GM shares up a bit and tugged Ford’s shares up with it. Is the long term solution for GM a merger? Some have speculated once in a while that a merger with Ford could produce a more dynamic company since they both share a lot of suppliers and vendors in the supply chain.

Personally, I feel that the days of the multinational conglomerates which were formed in the US are numbered. Regulatory problems keep them from competing globally and domestically with foreign competition which has free reign and little regulation in their home countries. Keep yourself diversified and consider your portfolio warned.

Correction. This is a word which seems to be eluding some many reporters this week. I have heard and read of the many reasons for the recent market decline: credit market fears, housing starts, fuel prices, etc. The only thing it has not been blamed on is the White House. Oh, and program trading. Have not heard that one blamed either, come to think of it. Maybe those two have just been flogged to much for anyone to believe they might actually be guilty of this decline.

So whats an investor to do these days? Sit and hold. Just ride this wave like all the rest. Traders? You’re on your own, pale-face. No one cares about traders. It’s the risk you take. You might make a mint and you might get shook out. I think a lot of day-traders did well this week and the last. My guess would be there are a lot of investors scratching their heads saying, “What the hell did I do that for?”