Why I Sold Ford

I have felt strongly about Ford and being a positive brand for the future for a number of reasons. Those reasons include the technology they employ in their cars and trucks is second to none and they planned for the future by not needing bail out money when GM failed in the last recession. Ford has continued to strive to improve profit margins, but feel that it will come with a longer term cost than the $11 billion they are using to restructure the business.

My argument for Ford's innovation was the Ford Fusion Hybrid which is a stylus looking vehicle that

gets comparable gas mileage to the Toyota Prius. Ford was one of the first auto makers that included radios that were compatible with either Android and Apple phones. There is so much tech and safety involved with Ford it would require a small book however in Ford's most recent restructure plan eliminates the Fusion along with all other cars except for the Mustang and a different version of the Focus so they may focus on more profitable trucks and SUV's.

Ford getting rid of the Fusion is not the reason why I am selling Ford, but with rising oil and fuel cost and an economy that will slow down, more people will be moving to economical sources of transportation. When the economy is going well, people spend more and tend to over spend to the point when things change they can not adjust quick enough. I feel Ford is going to be guilty of this and get caught with their pants down as they are going to sell these expensive trucks and SUV's that most will not be able to afford.

Affordability might be the word for the shareholder also as Ford is already trading at historic lows and has claimed to take a $11 billion charge to restructure the business. A large charge like that might put the dividend in jeopardy and makes Ford a less attractive stock to own. On the other hand, if Ford restructures it's business to the point where other auto makers are forced to copy their design, they will be ahead in the long run. That sounds good, but as interest rates rise, the economy grows more, and stocks will become overbought and subject to fail to create another recession. We might be years away from that, but when it does happen, spending will shrink. When spending shrinks, the auto makers feel it the worse. Ford will probably end up on top, but in the short term has more pain to endure.