In scanning through various newspapers and magazines (most on line), an interesting idea can forth by David Berman (dberman@globeandmail.com). Mr. Berman states one method to profit from the US housing market upturn is to buy Ford. Most investors are regular people who do not spend hours reading annual reports, but do all the things that are necessary to make an economy work. This means their days are doing other things, but everyone has an idea. In this case, Ford builds the type of trucks that contractors want to own and has a dominant share in the market. If you are in North America and go by a construction site, what type of truck do you see?  If you see a number of F series pick-up truck by Ford, then you go to the next step.

The second step is to look at the financials of Ford, because Ford is a large company, how much money does Ford make from the trucks and how important is this market to their financial results? In this case, Ford and GM have 93% of the pick-up truck market, the companies generate as much as $10,000 profit per truck, and for Ford the F-series is responsible about 90% of Ford’s profits. The theory is valid.

The final step is to determine when to buy the shares, is it a good time? Yesterday, Ford announced an increase in dividend to 10 cents a quarter to yield 2.9%.

The reason the writer likes the Ford story is everyone has ideas and buys things in the marketplace. Some of the things you buy are good investments, some of them are small parts of very large companies, that is when you have to do steps 2 and 3. The easiest place to start is what you do or observe on a regular basis..

There are more questions than answers, till the next time – to raising questions.