Stock analyst Peter Nesvold of Bear Stearns moved the market last week when he shifted Ford Motor from a "sell" to a "buy" and downgraded General Motors' rating to "sell." Ford's share price got a sharp boost.
What encouraged Nesvold to promote Ford? News of a spurt in sales or evidence of a financial turnaround? Not really. He says GM's share price -- which has been on quite a ride since the start of the year -- has factored in all the good news for now. Meanwhile, he says Ford has factored in all the bad news, including a big loss in the second quarter.
Nesvold may have a point. GM and Ford often seem to be on countervailing news cycles. When the news is grim for one, the heat lets up on the other. GM is passing through a good patch, and Ford seems to be flailing. The Bear Stearns analyst is betting on changing perceptions after Ford's updated Way Forward recovery is announced in late September.
But they shouldn't get overly excited in Dearborn. Nesvold counsels investors to sell the Ford shares within nine months, apparently figuring the good news can't last.