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Letter to the Editor

This article originally appeared in the November 2008 Issue of INSIGHT

Good Grief, Charlie B.

Well, even after Congress okayed the bailout plan, there is not one glimmer of good news to share with you in our stock chart this month. Every company we track, with the one exception of Japanese insurer Millea Holdings, has a per share stock price so far below where they started in January that if my head of hair were not already white, it would be by now after this October financial information. Good Grief!

Economic news is bad everywhere, I am sorry to say. Here in Cleveland, INSIGHT’s hometown, the bailout has created a sad local development. Instead of seeing some help for our banking community, Cleveland’s oldest and most renowned financial institution, National City Bank, founded in 1845, was immediately put on the block and sold to Pittsburgh-based banking giant PNC.

Automakers’ numbers in October were sad, indeed, with no hope that November, a traditionally slow month for vehicle sales, will be any better. The national car dealership groups that we track all posted over 50 percent downturns in their per share stock prices from their New Years Day marks. Sonic Automotive, at just over $3 per share, is down a whopping almost 84 percent YTD from the company’s initial 2008 price of almost $20 per share. I would even consider going out and buying a new car or two - if I weren’t too busy watching my retirement fund melt away.

Rumors are flying in Detroit about a possible GM acquisition of Chrysler in the works, as are hopes that the government may consider a big loan to carmakers to get them through these rocky economic times.

Our refinish manufacturers and suppliers weathered the storm a bit better. The per share price of Sherwin-Williams stock was down, but only by just a hair over 14 percent. At least none of the paint companies lost 50 percent of their per share prices like the car dealers have.

Of our insurer stocks, Allstate took the biggest blow this month on Wall Street. The insurer posted a per share stock price nearly $12 below its January posting of $52.25.

The Dow, down over 35 percent YTD, is mirrored by our Collision Repair Supplier Index, down 35 percent, and our Insurer Index, nearly 32 percent down YTD. Even our INSIGHT Fund Index, which had been performing pretty well throughout 2008, lost almost 30 percent in October.

I really cannot imagine a cheerful recovery magically taking place during the short two month time period left this year, no matter what the presidential election brings to Americans. All I can advise is to just hang on. Now is a bad time to sell any stocks. If you have nerves of steel, you may even decide to purchase a few shares, at bargain prices, and hope for a better 2009.

Happy Turkey Day to All!

-Charles Baker-

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