Ford quality improves, Toyota drops, Consumer Reports says

[ShockFX]

Try to tell anyone who lost their ass in the dot-com bubble burst that company perception doesn't mean anything to stock price. There were companies out there losing money hand over fist, but the perception was that everything related to the Internet was a Golden Goose, no matter how flawed their business model actually was.

 

Company perception means dick if you're actually investing vs speculating. Those people that invested in perceptions in the dot-com bubble weren't investing, they were speculating. Those companies had terrible fundamentals, no business plan, and no real product. But with a dotcom name they could raise millions in an IPO. The people that lost money are the ones that were just going with the flow, not actually paying attention to what was happening. I invest in Ford because I feel after this contract it's long run fundamentals, global product plan, and cost structure will make it an attractive valuation relative to the valuations of Daimler and Toyota. I don't care about the 'perception' around it because that is a terrible method by which to derive long term investment decisions. If you want to time the market around perceptions, be my guest, you'll lose.

[RichardJensen]

I don't care about the 'perception' around it

You shouldn't make the mistake of asserting that long term 'fundamental' investing is based on anything other than the same market forces that move the market from one day to the next.

 

Short term investing relies on the same fundamental factors as long term investing.

 

That is to say: perceived upside potential.

 

You --perceive-- based on certain analyses an upside to Ford Motor.

 

That is no different than what a day trader does when buying Ford at or near its 52 week low, with a view to turning it around within a few days or weeks.

 

---

 

The difference is that the --criteria-- you use to evaluate your investments fit your investment strategy, as does the criteria used by the short term trader.

 

And it's not a wise idea to denigrate short term traders. They provide liquidity to the market.

Edited October 18, 2007 by RichardJensen

[ShockFX]

You shouldn't make the mistake of asserting that long term 'fundamental' investing is based on anything other than the same market forces that move the market from one day to the next.

 

Short term investing relies on the same fundamental factors as long term investing.

 

That is to say: perceived upside potential.

 

You --perceive-- based on certain analyses a long term upside to Ford Motor.

 

That is no different than what a day trader does when buying Ford at or near its 52 week low, with a view to turning it around within a few days or weeks.

 

---

 

The difference is that the --criteria-- you use to evaluate your investments fit your investment strategy, as does the criteria used by the short term trader.

 

And it's not a wise idea to denigrate short term traders. They provide liquidity to the market.

 

Where did I denigrate them or say I didn't short term trade? I'll just resummarize my point here: you can't invest long term on perception with any realistic sense, but you can invest short term on either fundamentals or perception. Clearly, using both perception and fundamentals is the best way to consider investment. It would also explain purchasing Ford at $8 a share going into the UAW contract negotiation, knowing that the contracts would drive perception and bring more people around to the positive fundamentals Ford would have coming out of a contract. Ford topped $9 a share after GM's deal was ratified and is still hovering around that point. Bamn, 13% return in 2/3 weeks.

 

My argument was basically investing vs speculating. I have no problem doing both if it makes sense.

[mettech]

The word "Dividends" and Ford stock don't go together...

[RichardJensen]

Where did I denigrate them or say I didn't short term trade? I'll just resummarize my point here: you can't invest long term on perception with any realistic sense, but you can invest short term on either fundamentals or perception. Clearly, using both perception and fundamentals is the best way to consider investment. It would also explain purchasing Ford at $8 a share going into the UAW contract negotiation, knowing that the contracts would drive perception and bring more people around to the positive fundamentals Ford would have coming out of a contract. Ford topped $9 a share after GM's deal was ratified and is still hovering around that point. Bamn, 13% return in 2/3 weeks.

 

My argument was basically investing vs speculating. I have no problem doing both if it makes sense.

Denigration was inferred from this:

 

If you want to time the market around perceptions, be my guest, you'll lose.

 

And you again miss the point: 'fundamentals' are just another form of perception. It's all perception. Every last bit of it.

 

It is, to be quite blunt, all about perception.

 

Frankly, if perception didn't enter into it, how could any company ---ever--- be 'undervalued'?

 

You don't do yourself any favors by believing that 'fundamental' based investing is anything other than selecting a set of perceptions on which to base your investment decisions.

[ShockFX]

And you again miss the point: 'fundamentals' are just another form of perception. It's all perception. Every last bit of it.

 

It is, to be quite blunt, all about perception.

 

Frankly, if perception didn't enter into it, how could any company ---ever--- be 'undervalued'?

 

You don't do yourself any favors by believing that 'fundamental' based investing is anything other than selecting a set of perceptions on which to base your investment decisions.

 

Fundamentals are not another form of perception. A company's cash flow and future growth and whatnot usually turn out to be pretty accurate. It's the perception of the fundamentals that's relevant. But this is different from the perception of reputation or something you read in the news.

 

A company can be 'undervalued' because it is ignored or lost in the shuffle. Just like at Ford, certain areas that aren't demanding immediate attention aren't at 100% efficiency.

 

You cannot honestly argue that if you are investing in single stocks, you are better off investing based on what you hear in the news vs actually paying attention to changes that might occur.

 

Perception and reality are clearly 2 sides of the same coin in investing, but since perception isn't real and fundamentals are, I think it's a disservice to use perception to drive decisions rather than a filter at the end of a decision.

 

As another note, historically Ford and GM stocks trade up into the Detroit auto show. If not for the UAW contracts, the companies wouldn't be in the news and would trade pretty listlessly until NAIAS. So on one hand, you're right, it's all about perception. On the other hand, I'm right that it's all about being relevant and solid fundamentally. Agree to disagree.

[RichardJensen]

You cannot honestly argue that if you are investing in single stocks, you are better off investing based on what you hear in the news vs actually paying attention to changes that might occur.

That's a straw man argument. It is entirely beside the point.

 

Trading off 'fundamentals' involves expectations of future performance. It is as much based on 'perception' as anything else.

 

The accuracy of the 'perception' is what is, as it always is, at issue when it comes to investing. How accurate is your 'perception' of future performance?

[wescoent]

Last I checked, on the list of criteria in the filters large investment firms use to screen stocks, 'reputation and perception' weren't on there.

 

Reputation and perception mean something here when consumers are more likely to buy Ford vehicles due to higher quality and reliability. This is tied into expected future income. This is how this news is tied to stock price.

[ds91776]

Hey who ever subscribes to CR (sorry I dont remember your name), did the Edge get a "above average" or "well above average" rating (the full red dot)? Also, what about the Taurus X, is it still average or did it improve to above average like the sedan? Go FORD!

[NickF1011]

Company perception means dick if you're actually investing vs speculating. Those people that invested in perceptions in the dot-com bubble weren't investing, they were speculating. Those companies had terrible fundamentals, no business plan, and no real product. But with a dotcom name they could raise millions in an IPO. The people that lost money are the ones that were just going with the flow, not actually paying attention to what was happening. I invest in Ford because I feel after this contract it's long run fundamentals, global product plan, and cost structure will make it an attractive valuation relative to the valuations of Daimler and Toyota. I don't care about the 'perception' around it because that is a terrible method by which to derive long term investment decisions. If you want to time the market around perceptions, be my guest, you'll lose.

 

Well...depends. A lot of good investors still lost their shirts with dot-com problems. Not necessarily becuase they speculated on dot-com stocks themselves, but because over-confidence in the market overall drove up prices across the board, even for those companies with great fundamentals and business plans. However, the entire market was over-valued, which led to significant declines even in the stocks of those companies who were "doing everything right". Granted, many of those companies have since recovered, as have the investors, if they were patient enough and financially stable enough to ride out the wave.