By Kevin Meyer
A few months ago I, along with about 200 million others, was forced to invest in a failed company. Some people still think that failure cannot be allowed even if deserved. Probably the same people that believe team sports in school create dysfunction and grades and other performance measures are inappropriate and demeaning. Sorry, time to enter the real world.
new mortgage, you should fail. If you're dumb enough to invest in
those mortgages without realizing there's no underlying value, you
should fail. If you're ingenious enough, in a mad scientist kind of
way, to fashion complex financial instruments out of those packages of
worthless mortgages, you should fail. If you keep producing cars that
no one wants, ignoring improvement methods right in front of your
noses, and paying people several times the prevailing rate, you should
So out of morbid curiosity, I wonder how my investment is doing.
Two of the biggest car makers in America, Ford Motor Co. and Toyota Motor Co., called a bottom to the long decline in U.S. auto sales.
Yes, Ford and Toyota reported improved sales last month. Unfortunately my president… err financial advisor… didn't invest in those companies. He invested my money in GM. What happened at GM? The sales decline accelerated last month. Great…
Fortunately I decided to hedge my forced investment, and put some equivalent funds in Ford. How's that investment doing? Check out the chart on the right.
Not too shabby. My hedge probably worked and I'm about even. I wish the other 200 million taxpayers were so lucky.
But I'm very concerned. Ford has to compete against a "company" not constrained by real-world economics. They are backed by an entity that can simply print more money (as long as the Chinese continue to buy the supporting debt…) and change industry policy and regulation as necessary to guarantee an outcome… whether in the public interest or not.
Will Ford be able to pull it off? I have my hopes, and I'll continue to support them with my capital and perhaps even a purchase.