Detroit Brings Out the Gimp
- Jul 29, 2005
- admin
- Entrepreneur, Investing
THERE’S A NEW MOVIE BEING FILMED NOW IN DETROIT.
You remember the original “Cocoon” don’t you?
The movie where all the old people had a chance to “be young”
again.
Well they’re filming a sequal in the Motor City right now as
we speak.
But in this version of the movie the old timers only think
they’re able to turn back the clock.
In reality they can’t though.
The problem is that nobody has had the nerve to tell them
any different.
Let me explain.
It started 3 months ago when Kirk Kekorian, the crusty,
Dr. Evil style 90-year old billionaire from Vegas decided
to buy over 5% of G.M. stock.
He was gonna show these young whipper snappers in Detroit
how to sell a car for more then it cost to make it.
But while Dr. Evil was running around Detroit waving his
arthritic, kidney spotted claw at Rick Wagonneer, somebody
at Chrysler had an ingenious idea and placed a call to
the Sunny Hills Retirement Community in Florida.
Within 24 hours (the amount of time needed to embalm him)
Lee Iacocca was back on Madison Avenue pitching Chrysler on
t.v. again.
At first I couldn’t believe my eyes.
Lee was back on t.v. pitching the German car companies
products again.
Three thoughts immediately entered my mind (in this order):
1. Did the guys from Weekend At Bernies do Lee’s makeup?
If so, not a bad job…I wonder how they kept the smile
on his face.
2. Is George Costanza’s career in that much trouble?
3. The Japanese executives who run Toyota and Honda are
probabling on the floor giggling their brains out.
Come on folks! The last time Dr. Evil and Bernie represented
Detroit Ronald Reagan was still President.
TALK ABOUT DETROIT BEING OUT OF TOUCH.
Instead of adopting a “cradle to grave” strategy of going after
young customers and keeping them for life, they’ve decided to
attract the Florida retirement home crowd.
It’s almost painful to watch sometimes.
Just the other day, I was sitting in a room with several friends
when one of Lee’s new commercials came on.
Only one of the six 30-something’s in the room knew who he was.
And that was me!!!!
What the heck is happening here?!?!
Did a funny thing happen on the way to Detroit? Or did everybody in
Detroit lose their friggin minds?
To hear Detroit tell it, the problems are health care costs and
unions – nothing’s wrong with the actual cars they make.
Perhaps Larry Brown leaving the Detroit Pistons for the New York
Knicks (YES!!) will give them another new excuse that doesn’t
require looking in the mirror.
What happened to designing cars that young people actually want?
To get an idea of how bad things really are consider this:
ON THE VERY SAME WEEK G.M. SAID IT WOULD LOWER PRICES, TOYOTA SAID
THEY WOULD RAISE PRICES!
Wow.
For those of us who invest for a living, Toyota’s announcement
proved one of our golden rules of investing:
Companies with strong brand names have pricing power.
Companies with pricing power have higher returns on capital.
For example, every time Toyota invests $1000 into its business,
it sees a return of $130.
In contrast, every time G.M. invests $1000 into its business, it
lucky to see a return of $50.
I know shlylocks in Brooklyn who wouldn’t invest their money
into GM’s business. They want the most for every buck.
But that’s not what gets me.
What get’s me is that nothing has changed in the Auto business in
the last two years.
As a matter of fact the Auto business looks better than it has
in some time.
What get’s me is that all DETROIT needed to do was pick up a copy
of the FALLENANGELSTOCKS.com User’s Manual and THEY would have
learned one of the most important rules to investing:
***Never invest into a company whose primary product only competes
on price.
Remember folks, open minds mean larger wallets.
By – Dylan P. Jovine