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Thursday, November 13, 2008

Ford? GM? You HAVE Failed the Free Markets Test...

I own a few shares of Ford as an investment. Not a trade. An investment. I bought in at $6.85, and again at $6.55. This was a few years ago. I never added anything further to the investment portfolios in regards to my Ford position. Now mind you, this position represents less than one half, of a half of a percent of my current holdings. In other words, this position could completely disappear, and it wouldn't affect my bottom line whatsoever. It would be a minor blip. But I wanted to preface the following statements by letting people know that I am a (F) Ford Motor Company shareholder.

So what do I expect to happen with Ford Motor Company?

I realistically expect that the Democratically controlled Congress to come to the rescue and give Ford, Chrysler, and General Motors operating capital so that their business can continue. Not for the sake of "Ford" or "General Motors" or "Chrysler". But so that the health of U.S. GDP and manufacturing is dealt a blow that it cannot recover from. So that the average U.S. Citizen that has retired from Ford, or General Motors, or Chrysler pensions (my father being one of those) are not screwed beyond words. So that unemployment rate in Michigan does not skyrocket beyond their already ridiculous levels. So that Michigan does not slide from a recession that has lasted years, into a depression. So that Ford, and GM, and Chrysler stock can have the opportunity, years from now, to climb to new highs.

But what do I expect with Ford Motor company stock and as an investment?

Nothing. They have proven to me what they are worth. Nothing.

I invest with companies that have proven their worth. That proven they produce a quality product. That have proven their management can quickly adapt to changing market conditions. That have proven they have the foresight to understand, at least what every other intelligent trader on this planet has known for the last two years. That a serious recession was on the way. In short? A profitable company.

Adam Smith once wrote:

"The real and effectual discipline which is exercised over a workman is that of his customers. It is the fear of losing their employment which restrains his frauds and corrects his negligence."

Ford has proven to me, without any question - that they are negligent. And I do not invest with negligent companies that are rewarded for their negligence.

So this investment has turned itself into a trade. I will wait for the inevitable to happen. I will wait for the socialization of losses. When their stock, years from now begins to climb? And when Ford Motor Company (F) stock turns around? When my position with that tiny position shows a profit? I will do the moral thing for my household. I will exit this stock at a profit.

But seriously ... what sort of screwed up world do we live in where the weak and negligent have to be saved in order to save the majority from unimaginable suffering?

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