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Two Ways To Play: Automaker Pile-Up


Strengthen your portfolio in good times and bad.


December was a rough month for the world's carmakers. Sales numbers were released today and they weren't pretty.

According to Bloomberg, General Motors (GM) reported a decline of 31% (its total US sales plunged to a 49-year low in 2008) Ford Motor (F) 32% and Chrysler 53%.

Japanese carmarkers didn't fare any better. Toyota (TM) saw its business drop off by 37%, while Honda (HMC) and Nissan (NSANY) said sales fell 35% and 31% respectively.

Stephanie Brinley, an analyst with AutoPacific Inc., warns that 2009 will be worse. It's not a gas or credit problem, she explains. It's a "consumer confidence problem, and it's worldwide."

From the Bull Pen: Regardless of the horrific numbers, one can still consider Toyota for a trade. Professor Jeff Macke is playing this with a $60 stop.

From the Bear Cave
: It's tough to be bearish on the automakers with so much negativity surrounding these companies. But for those that prefer to play the downside, one option is to wait for Honda to rally toward $25 before initiating a downside position.

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No positions in stocks mentioned.

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