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Letter to the Editor

This article originally appeared in the January 2009 Issue of INSIGHT

Bailing Out

Once again, this month not a single Collision Repair Industry related stock that we track in our monthly report is posting a per share stock price at or above its January 2008 mark. The one bright spot on the horizon for our poor little chart is that we will be re-doing it for next month’s issue with the pitiful January 1, 2009 postings listed. Hopefully, comparing subsequent month’s per share prices to New Year prices will let us see some positive steps in our stocks as time goes by.

In December the U.S. unemployment rate rose to 7.2 percent, the highest in sixteen years. Altogether, about 524,000 jobs have now been slashed.

The Dow Jones Industrial Average finished 2008 down a whopping 33.8 percent, marking its third-worst year in history. Only 1931 and 1907 posted worse losses. In 1931, in the midst of the Great Depression, the Dow dropped 52.67 percent. That is one record I certainly do not wish to see broken.

In our chart, Sherwin-Williams is out ahead of the pack, with a price of $56.41 per share, down, but only by two percent in 2008. Valspar, at $17.09 per share, is off its New Year mark by about 24 percent. Both DuPont and PPG shares are going for about one third off their January postings. Akzo Nobel’s per share price is only half what it was at the start of 2008.

Insurers are getting clobbered on Wall Street, too. Allstate’s per share stock price continues to sink. The insurer’s price per share of stock is now less than half of its posting on January 1st, at under $26. Progressive and Travelers per share stock prices held fairly steady through the final month of 2008, down about 25 percent YTD.

As I had hoped, some bailout money has been granted by Congress to the Big Three car manufacturers. The impact of failure in Detroit throughout the national economic structure would be too devastating to contemplate.

It will be interesting to see what kind of economic relief measures the new Obama administration will work out with Congress after the Inauguration on January 20th. The word bailout has become an often-spoken word lately. Let’s hope its meaning will grow to include some integrity, wisdom, care, and coherence.

-Charles Baker-

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