Making money.

The American auto industry, GM and Chrysler in particular, have been tumbling since the last real financial collapse in this country in the 1970’s. They were in trouble then for the same reason they are in trouble now; bad business decisions, bad taste and an inferior product.

Ford is the exception and a buy, but first a great story.

Why all the whining and nostalgia about the demise of GM that’s being pumped through the airwaves? The unemployment situation for the UAW is a serious problem, but this three month wake for the great American icon is ridiculous.

GM did everything wrong, for 35 years. They built junk. Bankruptcy happens to companies that sell junk.

My first new car was a GM. I was a brand new Naval Officer and I needed a dependable way to get from Newport, Rhode Island to my girlfriend’s home in Pennsylvania.  At least at that time I thought I needed to do that. I’m sure it would look very different now.

This was prior to the pay raises for the military Reagan put in place in the 80’s, so I was stretching it to buy any car. And since it was a time of “Buy American” fervor, and I bleed red, white and blue, I bought American. The disaster started.

In the first month the brake rotors went out of round, which meant when I braked the car shook violently. The clutch cable stretched and made a groaning sound every time I stepped on it. The driver’s door wouldn’t close properly and the valves sounded like there were marbles inside the valve covers.

All the stories I had heard were true. They did build junk.

Not to worry said the young kid, which I was in 1979, it’s under warranty. I’m so glad I’m not young anymore.

After at least ten trips to the dealer, nothing, and I mean nothing was done to fix anything. It seemed it wasn’t the car that had problems, according to the service manager it was my head. That would have been true if my head had been between the driver’s door and the doorframe. I finally gave up.

One year later I traded the car for a Volkswagen Rabbit and never looked at another American car again. It’s one thing to have problems with a car; it’s another not to fix the problems.

Since 1979 I have purchased seven new cars, all foreign, and have never had a problem even close to what the GM gave me. In fact, since 1987 I have driven Volvos and have had two, count ‘em two times when the cars have needed anything other than regular maintenance.

GM not only made junk cars people didn’t want, they wouldn’t fix them either. I’m sure you can imagine how much nostalgia I feel for GM.

The bright star on the auto horizon is Ford.

Between 2002 and 2008 I travelled to Detroit for meetings and saw something that struck one of those, this means something cords.

Everywhere in the airport were signs talking about Ford and the new green wave that was coming. This was in 2002! Nobody was talking green cars in 2002. This green focus wasn’t advertised anywhere else.

After 25 years in the markets I have developed something of a sixth sense, and these signs triggered it. I didn’t know what was to unfold, but I knew something was afoot.

In the next few years Ford had major shakeups in the board room, got the union concessions they needed to operate profitably and started planning to build a hybrid car that would compete with the Japanese, without being threatened by congress or funded by the taxpayer.

In fact the Ford CEO sat in front of the congressional hearings last fall and stated they didn’t want or need a bailout, they were fine.

Since the announcement of the conversion of one of their trunk plants to a hybrid plant Ford stock has moved from the post crash low of $1.01 to a high of $6.51 in mid May. This is while GM and Chrysler were still feeding on the taxpayers and we have been force fed this three month wake.

In just a week Ford ran from $5.15 to $6.14 on news of its increasing sales, up 20% just in April. Ford will be the only winner at the end of this mess. It is well worth a position in your portfolio.

We may see a pullback to the fives, but whether you wait for a lower price or not, buy it in one quarter positions. Buy about one fourth your usual amount and wait for the dips. I can easily see a 30% to 50% short term run in a strong market. Long term, three to five years, we may have an even bigger story.

The auto industry is fine, the weak links have fallen away, as they should, and the new leaders are emerging.

Ford is giving off all the signs of a company that’s moving to the lead. Always follow the leader.

Good Luck!

Steve

Wednesday
Economic Reports: Fed Beige Book

The focus on will be on the Beige Book as investors look for any hints of what the FOMC may do at their next meeting. It will also be used to see if there are any sectors in any of the 12 regions that are beginning to show economic expansion or turnaround.
Thursday
Economic Reports: Retail Sales

Expectations are for a rebound in Retail Sales for May. Everything in my gut tells me that this report will disappoint. I just don’t see retailers posting improving figures in this economy. However, given that even Ford and GM just posted much better than expected auto sales for May, I guess anything is possible. I think this report will miss estimates, but could still post a small gain since last month.

Friday
Economic Reports: Michigan Sentiment

The revised Michigan Sentiment Index for May was 68.7. The expectations are for a reading of 68.6 preliminarily for June. This means a very small decline, which is exactly what I would expect. There are indications that this recession could drag on a little longer than expected, job losses continue, and gas prices are starting to creep up. All of this will weigh on the minds of those polled. I would be surprised to see a larger decline than expected.

There’s a lot of resources available for new start-ups, but securing government grants for small business is one of the better financial programs that new entrepreneurs can take advantage of. Because grants are not loans, there is typically no credit check, you don’t need collateral, and there is no income verification. The terms are pretty attractive as well since the funds that are received never have to be paid back.

Your relationship with money and how your feel about it determines your success. Period. If you feel shame when you have debt or if you are paralyzed when making a certain investment because of a relative number, then your money mindsets are affecting your results. To be successful, it is crucial that you begin a lifelong study of healthy mindsets and behaviors you should have where your money is concerned.

If you have a product or service that you want to make money from, or if you have a great idea for a business that is needed in your area, you should learn how to start running a business. While for some people running a business is as easy as running on a treadmill (which is not easy for some people either, mind you!) there are lots of people who get completely terrified by the thought of starting a company of their own and actually running the entire thing. If this is you, then here are a few tips about how to start your own business.

Do you have what it takes to be an entrepreneur? Take this short quiz and find out!

As a teen, one of the first things you want to start doing is to earn some money of your own, so that you can buy the things you want without having to beg your parents for it. However most teenagers won’t be able to get a job since they will be too young to be employed by someone, which means that if they want to earn some money, they will have to think of other ways to get it.

If you’re a single mother and you would like to apply for government grant you have many options. Did you know that if you want to start weight-loss business you can get to $65,000? Did you know that if you’re divorced that you could get $10,000 to look for new career? If you are over 55 you can be awarded $7000 to retrain. If you need to take care of your mother you can get awarded $10,000.

These are some of the most important aspects of opening a night club to ensure success. Opening a club is a great way to thrive during a recession; but you have to know what you are doing so that you create a club that draws people in and keeps them coming back time and again. Finding the right patrons and satisfying their needs will create loyalty, and bring you consistent, strong profits no matter what the economic outlook is. In fact, the bootleggers and saloon owners thrived during the depression of the 1930’s - why not repeat that today?

Even though America’s going through a financial crisis the government will still give away over $1 trillion in government grants this year. If you have been to college and you have outstanding debt that need to be paid in you can apply for a government grant help you pay off your student loans.