“The company, widely regarded as the strongest and best-run U.S. auto maker, is suddenly on the defensive. Ford is suffering from a series of self-inflicted wounds, from embarrassing quality glitches and costly product delays to declining productivity. Those mistakes couldn’t come at a worse time: The economy is slowing, and Ford’s share of the U.S. truck market–its main source of profits–is dwindling.”—Business Week, 6.25.01
Despite the worries outlined in the 2001 Business Week, it’s GM who today became the second major U.S. car manufacturer, after Chrysler, to file for bankruptcy. Ford is the only U.S. auto company to remain relatively healthy. In addition to not requiring government loans, Ford’s sales declines during the last few months were less than GM or Chrysler. Why should this matter to you?
To be clear, this post isn’t a recommendation to buy Ford. Instead, it’s about covers like the one above that place a target on the backs of companies. Both good and bad, these targets can lead you to make assumptions about whether it makes sense for you to invest. Hopefully, Ford will continue to improve its operations during the coming weeks and months so it can avoid the fate of its U.S. competitors. However, as history continues to demonstrate, these covers are not the tool you should use to determine whether its time for you to invest in a particular company.
{ 7 comments }
I wonder how many ads we would have to buy before Business Week would re-run their infamous “Death Of Equities” cover, which managed to precede the great 25 year bull market which began in 1982 by only a couple of years?
Seriously though, the reason the Sports Illustrated “cover jinx” is funny is because it's about sports, ie, nothing that important. I like to think that most people now have thicker hides and take their information sources a bit more skeptically. If nothing else it's part of the education they have received for all of the “tuition” they have paid in the last couple of years.
best,
Paul Meloan
I wonder how many ads we would have to buy before Business Week would re-run their infamous “Death Of Equities” cover, which managed to precede the great 25 year bull market which began in 1982 by only a couple of years?
Seriously though, the reason the Sports Illustrated “cover jinx” is funny is because it's about sports, ie, nothing that important. I like to think that most people now have thicker hides and take their information sources a bit more skeptically. If nothing else it's part of the education they have received for all of the “tuition” they have paid in the last couple of years.
best,
Paul Meloan
I am a Ford owner, I am a student of Toyota's Production System, I am impressed by Honda's durability in this economic environment, I have trouble supporting Government Manufactured cars.
When the politicians get involved, does the behavor gap still apply? My guess is “No”. I have some bank shares that are worthless. These are the only shares I have ever owned that had gone to zero. Why did these shares go to nothing? The shares went to zero because the politicians got involved in who should receive mortgage loans, in making recommendations of where people should keep there money (I loved my bank), in making decisions of who got tarp and who got picked up for pennies.
The unfortunate thing is that our politicians are into just about everything: Energy, healthcare, housing, etc.
The market should lead the way…not the politicians.
I am a Ford owner, I am a student of Toyota's Production System, I am impressed by Honda's durability in this economic environment, I have trouble supporting Government Manufactured cars.
When the politicians get involved, does the behavor gap still apply? My guess is “No”. I have some bank shares that are worthless. These are the only shares I have ever owned that had gone to zero. Why did these shares go to nothing? The shares went to zero because the politicians got involved in who should receive mortgage loans, in making recommendations of where people should keep there money (I loved my bank), in making decisions of who got tarp and who got picked up for pennies.
The unfortunate thing is that our politicians are into just about everything: Energy, healthcare, housing, etc.
The market should lead the way…not the politicians.
“these covers are not the tool you should use to determine whether its time for you to invest in a particular company.”
I disagree. Business Week is one of the best contrarian indicators that I know.
“these covers are not the tool you should use to determine whether its time for you to invest in a particular company.”
I disagree. Business Week is one of the best contrarian indicators that I know.
“these covers are not the tool you should use to determine whether its time for you to invest in a particular company.”
I disagree. Business Week is one of the best contrarian indicators that I know.
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