Buy and Hold Makes Sense Again
Those who know me know that I am a so-called car nut. My first car was a 1955 Mercury. I read all the car magazines and I have to say that the only people who really have a solid perspective on the current situation are the editors of those magazines. Washington certainly has no clue and for sure CNBC doesn’t know what is going on. The editors know the history of the car business, its good and bad times in terms of product and sales. There were the heady times after WWII, from the streamlined 1949’s to the muscle cars of 1967 when style, solid product, and marketing drove the markets. Then there was the 1973 to 1996 era when cars were crap and marketing tried to fill the void. And then there was the 1996 to 2007 period of excess and greed when huge SUV’s were the sign of the times. Now we are going back to solid well styled efficient cars with the 2007 + American models. All of this innovation and strong styling is occurring while the overall economic meltdown of cleaning out the excesses is putting pressure on automobile stocks.
As such, from a long-term perspective the auto industry is a buy. GM is down 96 percent and Ford 81 percent from the 2007 highs. We have not been involved in auto stocks during the meltdown but for us a share buy program makes sense now, ie we are buying the number of shares that we would have bought in 2007 , we will definitely be getting more shares.
Buy and Hold is now our approach. The action of the markets over the past two weeks has nullified the risk we perceived before this, of the double dip, i.e. a rally on the S&P to 1080 and then back down to 643.
The EMA ETF Fund NAV was 770 at yesterdays close.
7:23 AM CST