Categories
stocks

Stock Market Rally

Americans are addicted to bad news. So this may come as a surprise. There are stocks within the market that are on fire! I’ll give you one example from my portfolio.

ford-rally

In February, I took dividends from Honda Motor Company (a stock I’ve owned a long time, having a flat year) and invested those dividends in Ford Motor Company. For those who don’t know what that means, investing dividends means that I didn’t put any of my cash in from my accounts, this is money Honda “gave” me as my share in their profits. It wasn’t “real money” but untouchable income, “free money” to me in my IRA.

I bought Ford stock at $1.92 per share on a hunch. (Remember, I was playing with dividends… just cash sitting in my account.) Zooming out on their 3 year history I could see that Ford is traditionally a $10 per share stock. And while they aren’t doing well in the U.S., their European line is doing fine. Since they have a lot less debt and cut deeper, not taking government bail out money, it was reasonable to assume that their sector (American auto maker) had dragged their stock down more than real losses.

Look at March and to-date in April and you will see a massive rally. As of this moment, shares of Ford are trading at $5,98. That’s $4.06 more than I paid for them. Roughly 200% interest. Of course, looking at the chart you can see that I sold some shares at $4.24. Last week, I locked in some of those profits by selling enough shares to cover my original purchase. That means that I guaranteed that I wouldn’t lose any money on Ford… the balance of those shares becomes more free money. So, I took dividend money, which was free to me, and in less than 90 days was able to double it while still holding on to free shares in Ford.

My point is not to make myself look like a genius. Though, right now, I’m feeling pretty good about this investment. Certainly, in the last 5-6 years I’ve made the exact opposite mistake. I invested a ton of my portfolio in Sirius Satellite Radio because they started putting free radios in every car being made, never thinking it was an overvalued stock. The iPod hit it big and Satellite radio became the 8 track player. Shares I bought at $7 and $10 in the early 2000’s… I sold at $3 per share. (Currently trades at .43!) So you can see I am not a perfect investor.

My point is that you can’t base how you feel about yourself on news reports. There’s a lot of talk about our nation being in a recession. Certainly, millions of people are out of work and we are facing a very real housing crisis. But, that doesn’t mean that everything in the world is bad and we should wallow in our depression! There is certainly lots and lots of money to be made. People on Wall Street are making BAGILLIONS of dollars right now while the rest of the nation thinks we are in a borderline depression. (The swine flu is also a great cover for this! Can you say, “distraction?”)

Think of a recession as a shifting of how money is being spent. It’s not that people aren’t spending money. It’s not that there is less money in the marketplace. It’s that they aren’t spending it in places that we expect them to.

How do I know what to look for?

Companies are typically slow to react to that shifting. Ones who jumped the trend, even a little, will do well. Companies that tried to ride out the last few dollars on yesterday’s trend (Just look at every car General Motors had on their line in 2008… another example would be AOL/Time Warner) are going to get punished because they don’t have a product people will buy. You have to be like Warren Buffet. Before you invest in anything, see it. Do your research, read the reports… but that shouldn’t replace walking around a store… or in this case a car lot.

Categories
hmm... thoughts

Things I’m thinking about today

Ever just have a hodgepodge of slush in your mind? Here’s some random thoughts this morning.

– While I still think of myself as a down-the-middle, maybe even conservative evangelical Christian… I’m finding myself tired of the grey haired leaders.

– As much as I’d like to say I agree with the complimentarian position of women in ministry, I thinks it’s just a politically correct version of it’s older self. I think you can put me in the egalitarian position of women in ministry, if those are my choices. I think its straight up revisionism, chauvinism, and crazy hermeneutics to say women can’t be elders and pastors in churches. (Conservative brethren allow women to practically serve in these roles, they just call them “directors of ministry” and pay them 50% less. That’s sexism.)

– Speaking of crazy hermeneutics… I think the rapture was made up by someone who liked science fiction. People argue about a pre-tribulational and post-tribulational rapture of God’s people in revelation. I keep reading the New Testement verses about that, and I have to say I think it was made up. I’m still firmly in the pre-millenial camp, but that whole rapture deal?

– This year’s American Idol is ridiculous. Paula and that new lady are cheerleaders. Seriously, what is Paula on? Randy isn’t say “dog” nearly enough. And the longer this thing goes,  the more I like Simon. At least he tells the truth.

– I’m officially addicted to the Travel Channel and the Discovery Channel. I could watch them both 24 hours a day.

– I’m trying to be more green by taking the trolley to work in April. The mile walk back and forth to the trolley stop won’t hurt me either.

– I can’t wait for it to warm up a bit more so I can swim at the Kroc Center.

– The last month has been amazing on the stock market. Seriously, one of my stocks gain 25% just this week.

– Call me a hypocrite. But I made $1 per share on Ford in the last 2 months. Easy money! I think GM is going out of business in the next 6 weeks. But Ford and Chrysler are going to make it.

– I wanted to pull an April Fool’s joke on YS, I really did. But after I saw all the online jokes I was glad I didn’t.

– Speaking of work… I’ve been wanting to run around screaming about how excited I am about new stuff we’re doing. But people there already think I’m nuts so I didn’t.

– I like my iPhone, a lot.

– The other day I had dinner with Gary Shell from our church in Romeo. He asked me if I had any regrets about this move. I feel bad about it but I laughed. No regrets. I’m not the kind of leader who second guesses himself much. But I do miss our friends, big time. We are trying to scrape together a plan to go to Detroit in July.

– Baseball season is upon us, I’m calling it. Cubs win the World Series. 6 games.

– The kids Spring Break begins today. I doubt we’ll make it through April without a trip to Disneyland.

– When Jesus told his disciples, “Take up your cross and follow me” before the crucifixtion… what did they think? Is that kind of like U2’s new song, “Get on your boots?”

– Stoney still hates the water. He’s the only labrador retreiver in the world who won’t swim.

Categories
hmm... thoughts

How To Fix the Auto Industry: Federal Right to Work Laws

This is my second idea: Pass a federal right to work law. (Idea #1)

For anyone outside of the pretend world known as Detroit, this solution is a no-brainer. In order for Ford, GM, and Chrysler to move forward into the next 100 years of automaking they have to restructure how their labor is paid.

One important element, the heaviest of them all, is to dump the UAW as the only labor force. With unemployment hovering near 10% in most of the Detroit area counties there is no better time to renegotiate with the unions. (In other words, if the unions refuse to comply simply replace those workers with unemployed people at new, lower wages.) Simply put, if the federal government is going to loan automakers $34 billion to get out of this mess, they should also pass a federal law making every shop in America an equal opportunity employer. As I wrote in January 2008, I think allowing employees to decide whether or not they will join a union is fair. But, today in America, in many states that choice is not allowed.

More importantly, for the former Big 3 to survive they need to scale back wages to more reasonable levels across the board to compete on the open market.

Yes, I am arguing that the Big 3 compensate their employees like other US-based automakers. Toyota, Honda, Nissan, and many other “Japanese” automakers pay their employees well, but still roughly half what the UAW demand as “fair.” And when the Big 3 made money hand over fist, who cared what they paid people? But if you’re going to mortgage our childrens future on bailing out these failed companies… let’s spend the American tax payers dollars wisely. Their pay should be based on what these other automakers pay their employees. Or perhaps, since this is federal money, they should be compensated like government employees?

I’m not suggesting that we make unions illegal. I’m suggesting that it become illegal to force people to join them! Allow auto workers, state employees, teachers, and other unionized types of workers to chose for themselves if they want to be in a union or not. Isn’t that fair?

It’s time to have all employees work together for the good of the Big 3. Again, if you haven’t been exposed to the auto industry you have no idea of some of the silliness. There are two separate classes of employees at an auto manufacturer. There is union labor and there is management labor. They have different pay structures, different disciplinary structures, different hiring practices, and even different parking areas! It’s time this all ended! We need the plant manager and the woman on the line to be on the same team. We need the executive and the janitor to have the same health care options, benefits structure, and vacation times. We need to completely kill the entitlement society that the unions create. No more 80% pay layoffs. No more pools of employees who get paid 100% of their salary to play cards. No more union stewards making what a plant manager makes. On and on.

If Ford, GM, and Chrysler are going to take federal money it is time they started acting like 21st century companies. In other words, it is time the former Big 3 started acting like the companies who are kicking their butts.

Learn more about the National Right to Work movement.

Idea one: Change the car buying experience

Idea two: Open the manufactoring to non-union employees

Idea three: Coming soon…