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.

Source: It’s a Company Not an Icon