Deals on wheels and looks at books played more than bit parts in this week's Wall Street flick.
Ride it like a dead Ford
It was another busy yet ultimately difficult week for Ford
Giving car buyers a free pass on the interest meter has been a hit since it was first rolled out as a lifesaver five years ago. As Rich Smith pointed out, the new Ford promotion is unique in that even the subprime credit flunkies will have a crack at the 0% offer.
That's right -- Ford is targeting a group that has a decadently high loan default rate, hence the poor credit rating. And Ford wants to get them behind the wheel of a car with no interest income to show for it?
The bottom line is that 0% works. Back in May, I bought my first new car in the General Motors
GM offered me either 0% or a $1,000 cash rebate. I'm no dummy. I went with the 0% and have the cash sitting in a money market account collecting interest at a 5% clip. Even after taxes, I will clear more in interest income in the first year than I would have with the GM rebate. My dealer even asked me whether I wanted to finance the 0% buy for three years or five! Five years, buddy. I'll work that interest-float magic like a young Warren Buffett!
Ford had to do something. High gas prices have hit the company's truck and SUV business hard. A tenuous economy begged for something lavish to stand out in the crowd. The problem is that deals that treat everyone equally -- like this 0% deal -- often attract mostly those who normally wouldn't be privy to this kind of deal. You can't hang a business model on that kind of risk. Unless, of course, you're a conspiracy theorist and you think that this kind of debilitating move will hurt Ford and allow the namesake family to snap up the company cheaper.
Throwing the book at Borders
In my make-believe world, I fathom that the best investors are those who buy book retailers. Follow me here. If you are the "hands-on" Peter Lynch type, buying into a company like Borders
That's what makes someone an informed investor, right? OK, so maybe my theory is flawed, but any well-read investor would have found the superstore's latest quarterly report practically unforgivable. Wall Street expected a loss. It got it. The problem is that Borders' report came just days after rivals Barnes & Noble
Borders may have unique circumstances, but it had better be careful. Its shareholders can not only read, but they can also read between the lines.
Until next week, I remain,
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Longtime Fool contributor Rick Munarriz recommends windshield wiper fluid when trying to look back. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He does not own shares in any of the companies in this story. The Fool has a disclosure policy.