Market Correction? Do Not Panic! This is Where We Should Be!

August 15, 2011 By George Lovato Jr 1 Comment

Stock Market CorrectionI cannot take it anymore! The talking heads and Washington are driving me nutty! Between the two factions everyone should be jumping out of a window by now. Stop! Do not panic!!

Those of you that know me well can verify the fact that I have been saying the market was overvalued above 10,500. Put the puzzle parts together. The White House is not providing any leadership. On his best day the President is not even an “Armchair Economist”. He does not have a clue about what the Business Plan For America is. Congress as well has done a very poor job of instilling confidence not only from the American public but from foreign governments and foreign investors. Above and beyond that, the economy in in the proverbial tank. We have a government that cannot even tell the public what the true deficit is. So then why would it attempt to bump its’ head on 13,000? An overly optimistic group of traders and investors not really paying attention to the real metrics? Well it is more than likely all the above and some. Correction you ask? No this is where we should have been all along. The market has been overvalued for some time now.

We Need Organized Leadership

Europe is having its share of issues. But as far as we should be concerned, deal with our problems first then maybe move on to assisting others I say. For now we need organized leadership. We need to show the world that we are in control of our own numbers, budgets and forecasts. We need the American people to believe that the government really does know how to steer this massive economic ship. We need to have a government that promotes growth by stimulating the small business and its owners to reinvest and hire for expansion. Building  businesses for growth through governmental incentives. That is the kind of boost we need. Give the incentives to the small business person I say. Let’s not put the governments’ money into beatification and highway off ramp projects. That is very short sighted. We need a Congress that stops bickering, takes off the party hat and puts on the hard hat. Look at tax incentives as capital to stimulate business growth. Thus economic growth!

We Need the Business Plan For America

I am tired of  the Presidential rhetoric. I am tired of the Congressional verbosity. What we truly need is someone that has the Business Plan For America in his head and wants to put a plan of action that will put America back on the road to growth and prosperity. So Please Mr. Romney, tell us what it is. Since you are going to be the next President, share your Plan for Prosperity. We need it now more than ever. Leadership is lacking  and it shows. We need to see your vision. We need to know that you have a sensible plan for business and for prosperity. We heed to see the same light at the end of this long and dark tunnel as you do.

The President has shown absolutely no knowledge of the theory of Economics. He has shown no knowledge of banking and finance. All he has chosen to do is blame the previous administration by saying “We inherited this problem and it is not ours.” Well guess what the day you took office Mr. President, it became your problem and you are, under the law, forced to take ownership of this mess. Get on with solving the problem and stop trying to tell us it is not yours.

Look For Bargains on the Stock Market

In the meantime, look for the bargains on the stock market. Buy gold! In short go in two directions at once. I have been out of the market since early last year. I bought Ford at $1.66 I sold it at the top as well as a host of others that were all bargains I might add. I have been buying silver whenever I can and gold along the way. It is time to get back in the market but only buy the undervalued bargains. The market is where it should be. That is until the economy bounces back. So there may be a little more to go to reach the absolute bottom but you are starring at it. So pay close attention to the metrics and get in only where a bargain exists.

The Government Can’t Help You But I Can

On to other matters what about money for my business you ask? Well it’s out there but it is scarce in some respects. In others it is abundant. All solid businesses can form capital. In other words all good transactions get done. There is light at the end of the tunnel and we at BHCL see it.  But it takes hard work and a good business plan and solid management. Have hope, for we are going to see new leadership in Washington come the election. If this guy was one of my bankers I would have fired him by now. So Mr. Romney give us your Business Plan For America. We need to know new leadership will in fact put us all on the road to prosperity again. Meanwhile call me if I can help you with your business capital formation project! I know the government can’t help you but I can.

Disclaimer

This is not an offer to sell nor an offer to purchase securities. This is commentary and opinion. Any advice to purchase or sell any financial instruments, securities or government bonds should be sought from a licensed/registered financial advisor and or securities broker/dealer.

Filed Under: Business, Finance, Government, World Economy Tagged With: , , , , , , , , , , , , , , ,

GMAC Again?

January 12, 2011 By George Lovato Jr 2 Comments

Lost in a fieldA Look forward – But First a Look Back

So here we all sit watching General Motors make another bold move. But first before we talk about the latest and greatest let’s look back. Years ago GM sold off the GMAC unit to a third party. The proverbial cash cow is tossed to the wind. Many in the industry said that was foolish due primarily to the fact that it was such an integral part of the overall business model. Nonetheless it was sold. General Motors continued to operate ineffectively after that transaction. They continued to receive criticism from the observation gallery about the transaction. The dealer body thought it was a stupid move as well.

Fast forward. GM purchase a second rate subprime finance company recently. All of a sudden someone at the helm begins to awaken. Next GM decides we need our venerable GMAC unit back. “Let’s get back in the business of finance!” What genius will get credit for this one? When I read about the purchase of the subprime unit I was not surprised but a little dumbfounded. They got kudos from Wall Street like this was a revelation. Now Wall Street is amping the volume up again about the latest revelation that they need to enhance the finance arm.  To this I say hogwash! The business model should have never excluded them from the finance business to begin with.

Rewarding a Pencil Pushing Wunderkind

Now some pencil pushing wunderkind will be touted around the company as the next Bill Gates for coming up with this new and “fresh idea”. They will be given some notable bonus and the clock will continue to tick away. We as shareholders will continue to wonder who is at the helm and what map they are  looking at. I say never reward stupidity. I know I have never been rewarded for it because if I ever was I would be a billionaire by now.

Because of my role in the development of AutoStar, I keep abreast of automotive industry matters. Next I have the good fortune of speaking with dealers all over the country. I speak frequently to the displaced General Motors dealers as well as the survivors. What I can tell you is Ally Bank is doing a poor job at servicing and managing the opportunity they have in providing financing to the dealer body as a whole.

Ally Bank?

GM needs a replacement service.  Ally is just not what the industry needs. There are too many inexperienced poor quality field managers that do not understand, let alone execute, the much needed wholesale financing service the average dealer needs to remain competitive. I hear every day how they are fumbling the ball. I even have been in some negotiations with the “boys” from Ally and I am surprised in some cases that they were even picked to do the job on the first place. They continue to toss perfectly good clients under the bus. The credit qualification standards are archaic. Their overall approach is crude and very unprofessional. Simply they need to be jettisoned out of the picture. They have no vested interest in this industry. They do not care and thus they can destroy the industry from within at a critical time.

Cartographers Who Can’t Read Maps

But back to the cartographers at GM. I say you read the map wrong years ago. No you should not be rewarded for doing what you should have been doing all along and that is to provide a captive finance source. Read the map boys! If you have to,  go back a couple of decades and read the annual reports. GMAC was part of your original mission! If you are going to put it back together put in a floor plan program with modern management mechanisms. Put in consumer lending products that meet the market demands. Provide what will work! Do not provide something for the sake of Wall Street. Pay attention to your dealers! They are your lifeblood. They are not a disposable asset which is how you have been treating them. They too have been around as long as you have. And oh by the way, don’t buy a percentage buy control or all of it! Get back in control of which way this ship is headed.

Filed Under: Finance, Government Tagged With: , , , , , , , , , ,

I Miss Sonny Bono

December 3, 2010 By George Lovato Jr Leave a Comment

He Always Put His Best Foot Forward

Sonny BonoSonny Bono went into politics with the best intentions. From the day he ran for mayor until he achieved success as a congressman he put his best foot forward. I have often thought that more politicians should have had a little more Sonny Bono in them as they set forth on a political career. But alas that is not generally the case.

America Wants Honesty From Their Congressman

I listened to Ben Stein on  the CBS Sunday Morning Show. I took his points with some skepticism. Yes Charlie Rangel was a war hero. Yes he has served for a long time. And he has been behind many an important political agenda. But he did make some mistakes. In a time when the average American wants honesty from their congressman he offered up uncertainty. We will never know the entire story political or otherwise. We will only know what we see and hear in the press and as we already know that cannot be relied upon. But someone of his tenure should have been smarter. Someone of his tenure should have been more responsible. Someone of his tenure should have not been as sloppy. Congressmen or statesmen should live to a higher standard. This was not the case.

Sonny Bono…He Got Right

At a time when we really need Washington to outperform themselves we little need an incident like this. When we need Congress to be forward thinking and innovative we did not need this kind of distraction. We need these people we elect to live and work by example. And that example needs to be a reliable and a trustworthy one.

What Charlie Rangel needed was a little more Sonny Bono in him. I do miss Sonny Bono… he got right.

Filed Under: Government Tagged With: , , , , , , , , , , ,

What Would Have Happened to GM….

November 12, 2010 By George Lovato Jr Leave a Comment

…If the Government Had Not Stepped In?

I have my own theory. But applying the rules of commerce and survival of the fittest concepts lead me to believe GM would be a quite different animal today. So let’s travel down the path of speculation.

Piece By Piece It Should Have Been Liquidated

chevy-volt on production lineGM was in terrible shape. Heavy at the top and strained at the dealership level. Individual models were stagnant and stale. Compensation was out of line with performance and the consumer thought it would be common place for the company to lumber along in losses. So in the real world what should have happened? First of all management should have axed and removed from top to bottom. A new search should have been deployed to find new and innovative talent to steer the company. Each division/brand should have then undergone a thorough evaluation to ascertain if it would be viable as a standalone entity. Then the brand popularity should be measured. The least desirable brands should then should have been spun off and generate cash and eliminate debt. Piece by piece it should have been liquidated. Then in the end the remaining desirable divisions/brands should have made up the new GM. Funny though, I think all the brands would have survived but just in a different configuration. The consumer would have most likely had access to all they see today but just run and manufactured more efficiently.

A New Finance Division Was Needed

Instead of floating a dead stock issue the company should have then recapitalized a new and more vibrant finance division with new creative minds at the helm. Out with the old and in with the new and more capable. This new finance arm should be able to provide an array of products and services to not only the consumer but the dealer as well. This finance company should have been prepared to invest in every dealer remaining worth his/her salt. This new company just should not have been renamed but rebuilt from the ground up.

The Formation of a New Dynamic Company Was Required

The newly structured GM should have floated a separate stock issue to re-tool the dealership distribution network and put the money where the most return could have been realized. The remaining brands should have put money into new more cutting edge product development. Instead of floating stock to pay off the US government/taxpayer, money should have been deployed to form a new more dynamic company. Instead what we have is a top heavy company with old management, just less of them, in place doing what they have always done. Yes it is making money but they should have been doing that all along. Yes they should be making money because they have less debt. That sort of seems like a no brainer to me.

It Is The Same Old GM

A GM trying to make a sows ear look like a silk purse with this upcoming offering. I think my imagination would have served GM better and the public as well and it would have saved the government/taxpayer a ton of money. The rules of commerce and survival of the fittest were derailed. I thought those rules were what out capitalist system were all about? I guess I need to rethink all of this.

Filed Under: Business, Government Tagged With: , , , , , , , , , ,

We WILL Raise a Hand of Discontent

November 2, 2010 By George Lovato Jr Leave a Comment

A Smoky Haze Over Washington

American Bill of RightsThere has been a smoky haze over Washington for a long time now. To some of us the term smoky haze had a different meaning when we were in college but now it has a different meaning but the effect is the same…a stunned dazed look at nothing in particular and resulting in inarticulated movement. The result for us in the real world is economic stagnation. The effect on business is banking congestion. Banks are not lending and businesses are not growing and as a result new jobs are not being created and consumer spending is halted. Banks are uncertain of the future. We as citizens are uncertain of our future. Guess what everyone agrees that is the state of the economy we live in today. There is no argument.

Sober Up Washington

Washington must now sober up and clear their collective heads. The voter will tell the heads that we want solutions and not rhetoric on this election day. We want options not edicts. We need unbuckling of regulation not bridling. The tax incentives of the former administration stimulates business. Regulations bind business growth. And at a time when we need for Washington to go on its own diet of spending and growth the cause and effect of such will benefit us all in many different ways.

We WILL Raise a Hand of Discontent

Hey all you heads in Washington!!! Pay attention!!! Wake up!!! Sober up!!! Shrink spending!!! Reduce regulation!!! Provide the tax incentives to those that pay the majority of them to begin with!!! Put the economy back on track!!!! Or else you may not be fortunate enough next election to win. We WILL raise a hand of discontent with our votes.

Filed Under: Banking, Financial Regulation, Government Tagged With: , , , , , , , , , ,

Government Has Not Learned Anything From History

September 13, 2010 By George Lovato Jr Leave a Comment

Banks Get New Restraints

gavel on moneyFront page news reads “Banks Get New Restraints”. Globally governments are agreeing to add more regulation to avoid future financial melt downs. That assumes that all the governments involved have a crystal ball and the view from here is in fact what we will need seven years from now.

And it Was Not Good

As for now we need a little less regulation to allow the financial industry the latitude to maneuver in choppy uncertain economic waters. So now government, the icon of not knowing what is right for business is using its fuzzy image crystal ball to predict and control the future. I cannot disagree more. I have seen firsthand what over stepping regulation can do to an industry. I have seen what the perspective and inexperience of regulators can do to a perfectly healthy business. And it was not good.

Arm Chair Quarterbacking

Imagine for a moment a person that has no real world business experience making sea changing decisions for a financial institution. This government regulator is now arm chair quarter backing the strategy and business practice of a bank. Dangerous. Now put the factors together. More regulations phased-in in the future, of which we know nothing about, along with government regulators whom know little if nothing about how to interpret and integrate these new regulations into safe and sound business practice for banking institutions.

The Complex, the Mundane and the Futile

This is clearly a case where government has not learned anything from history. The government is going to over reach, over regulate, force over capitalization and overkill, at a time when we need to free up time of bankers to get back in the business of lending. Instead we are now going to increase cost and take away valuable time to understand the complex, mundane and futile. Wow!

Filed Under: Financial Regulation, Government Tagged With: , , , , , , , , , ,

Mr President – Your Government Should Leave Well Enough Alone!

August 30, 2010 By George Lovato Jr 1 Comment

Stock ticker moving upThe Guiding Minds of Corporate America Have Done a Solid Job

Recently we have seen much comment on the fact cash harbored in corporate America is at an all time high. We have also heard how the government is pushing big banking to lend to small business again. In both cases there is a lesson in the news. First cash being at an all time high is in fact a good sign. This in simple terms means that at the appropriate time corporate America will reinvest in itself. The mood, tempo and general indicators of the economy will be right and the capital to exploit the economic condition of the nation will be present. This is a sign of recovery. Corporate America has done a pretty good job of judging the right time in a number of areas. Have there been mistakes and false starts in the past? Certainly. But by and large the guiding minds of corporate America have done a solid job.

The Government Has Made More Mistakes Than American Enterprise

Let’s speak for a minute on the governments comments. First they have played banker in the recent past. They have made what I consider some very controversial decisions in that regard. They helped the weak to survive and intervened in a manner not fitting American enterprises number one rule – survival of the fittest. Now after we have stopped the bleeding of the biggest economic banking hemorrhage in human history, the government wants to tell banks what to do. The government has made more mistakes than American enterprise. They have attempted to change the basic rules of business governance. Now before the timing and condition of the economy is ripe for regenerating the lending cycle again, the government wants to push where pushing is contradictive to its warnings to Wall Street and the financial community at large.

Dear Mr. President,  leave well enough alone. Business and the financial community will be its own best judge as to when, where and how it will begin to fuel the rest of the economic recovery.

Filed Under: Banking, Government Tagged With: , , , , , , , , , , , , ,