In my first post on Cult of the Lamb, I offhandedly mentioned that it was retailing for the price of two shares of Ford ($F) stock, and that it was the better deal. This led to one friend asking me: “wait, why is Ford stock not a great deal?”

For the last 40-odd years Ford (and most American car companies) went through a mini-death spiral.  Profit margins shrank badly and caused them to lose a lot of value.  On top of it Ford is a “dividend king” stock, it pretty much always pays a hefty dividend which means investors like to hold it but you shouldn’t expect it to increase in value because money handed to the investors is money not being used to grow the company

Still, it’s true that Ford is down about 40% year to date while the broader stock market is down only 20% (Meta aka Facebook is down 60%, if you want to see what a disaster looks like).  Probably a lot of that is a combination of inflation (real wages are down 3.2% this year, and there was 0% real wage growth in 2021 due to inflation) and also the fact that EVs/plug in hybrids are the future and Ford barely does that.  Tesla is an all EV company and Toyota has become an all Hybrid company, both of them are expected to grow their revenue next year while Ford is expected to shrink.  Tesla was dummy overvalued in 2021 but it’s still a growing company and that counts for a lot.

So Ford as a company is worth less than it was in the 80s and it doesn’t have a plan to fix that.  It still pays a 4% dividend but so does a government bond these days and bonds are risk free.  If you buy Ford you’re hoping it goes up but you can’t really expect it to since revenue is shrinking.  You’re praying someone at the company figures this out and shakes things up.  If they could figure it out they might go somewhere.  Toyota produces 3x the amount of cars Ford does, but Ford produces 3x the amount that Tesla does.  5 years ago I remember thinking Tesla was a scam because Tesla produced less than 1/40 of the cars Ford did, but as I told you I was wrong in my bet against Musk (really I was in an echo chamber) because Tesla has grown and Ford has shrunk.  People buy Tesla stock expecting it to keep growing, people buy Ford stock hoping it stops shrinking.  Ultimately Ford’s history this century doesn’t make that seem like a good bet.