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Letter to the Editor

This article originally appeared in the March 2009 Issue of INSIGHT

In Like a Lion

Well, the month of March came in like a lion on Wall Street - and I mean like a beast, not a king. Dismal economic news continues to crop up everywhere I turn. Stocks continued to fall as I put pen to paper this late afternoon. The S&P ended up below 700 at close today for the first time since October 1996. Persistent uncertainty about the amount of money needed to shore up the financial system overshadowed a half-hearted hunt for bargain stocks. The entire country is waiting to see if bailout money and assistance for struggling homeowners will be enough to turn the tide.

Surprisingly, the only U.S. stocks that have crawled out of the negative in our stock chart this month are two of our national car dealerships: AutoNation, up a hair YTD to $10.68 per share, and CarMax, up a very nice seven percent YTD to $8.88 per share. This may be a momentary high for both dealership groups. New car sales continued to plummet in February. Both Penske Automotive and Sonic Auto-motive felt the pain again in February. Penske’s per share price has dropped about 15 percent YTD, from $8.52 to $7.26. Sonic Automotive’s per share price of $1.60 has plunged over 60 percent since New Year’s Day. Stockholders at Sonic are certainly weeping, given that a year ago, each Sonic share was trading at just under $20.00.

All of our refinish paint manufacturers are struggling on Wall Street this month. Sherwin-Williams, in particular, the paint company that was doing pretty well at the Dow in December 2008, has watched its per share stock price fall nearly 22 percent YTD in February.

Insurers are getting clobbered on Wall Street, too. Allstate’s per share stock price of just over $21 is 36 percent below its posting on January 1st. Progressive and Travelers per share stock prices have gone down about 15 percent and ten percent respectively YTD.

INSIGHT’s Insurer Index has fallen over 19 percent since the start of 2009. At close of day today on Wall Street, there are hints that tomorrow may see a tiny step upward at the Dow. Investor confidence really needs some TLC, and quickly.

More worrisome than the state of our Insurer Index to me is the still falling Parts and Equipment Index, which has dropped over 21 percent YTD.

What kinds of numbers will we see by the end of March? Will the government, the banks, auto companies, the housing industry, insurers, and manufacturers be able to work together to turn things around? I would like to see March go out like a lamb.

-Charles Baker-

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