I admit that I don't have the slightest idea how Wall Street figures out the values for the stocks of automotive companies.
With fascination, I've watched the market and have seen where investors are putting their money: the Internet.
Soon, a lot of Internet stocks will enjoy a higher market value than good old (fill in the blank), which makes something, markets it and sells it. That doesn't seem to have much romance anymore.
At the beginning of the year, Delphi spun off from General Motors, and now GM plans to give up the rest of what used to be its component operations. Delphi is like the rest of the supplier companies, and its stock price doesn't seem much more exciting than the price of the automakers' stock.
When Daimler-Benz merged with Chrysler, it was the smaller company in sales, profits and units sold. But Daimler's stock price made it a bigger company. European investors seem to put a higher value on automotive manufacturers than do U.S. investors. Will those same European investors feel the same way about DaimlerChrysler, or will the U.S. connection taint the value of their investment?
But as the Dow Jones average shot through 10,000, automobile stocks, including suppliers', still hadn't exploded like those high-tech stocks. Happily some of the automotives have seen big increases during the past 18 months, but most still lag behind their high-tech brothers.
Maybe one of these days we'll read that one of these automobile companies is going to become a virtual auto company. Then we'll see some investor romance.
If you look at the recent history of the automotive segment, it becomes obvious that investors are happy about the success of the automobile companies. But at the same time, they think that it can't go on and that a recession is just around the corner. I suppose that in the middle of a recession, Wall Street would assume that things were going to be rosy real soon and then they would bid up the stocks.
After all these years of prosperity, it's as if we owe the economy a recession. It's a rule. Maybe it was, but maybe it doesn't have to be the rule in the future.
The American auto industry is on its way to its best year in history. Will Wall Street assume that there will be a fall after that? Maybe not anymore.
I guess that's why those analysts are so successful on Wall Street. They can at least explain it.