One of my many useless skills is reading too much into an ordinary article or news story. There was a good one today:
NEW YORK (AP) - Shares of General Motors Corp. plunged Wednesday to close below $10 for the first time in more than half a century, on worries about the company's cash needs and speculation about a possible bankruptcy protection filing down the road. GM shares fell $1.77, or 15.1 percent, to close at $9.98. Their session low of $9.96 marked their lowest point since September 13, 1954, when they hit $9.92, according to the Center for Research in Security Prices at the University of Chicago. The price is adjusted for splits and other changes.
After reading that, I imagined a 55-year old who got a hundred shares as a christening gift back in 1954. He's ready to retire now and on a recent trip to his safe deposit box, he quickly discovered that they were worth the same $1,000 that they were worth when his rich uncle gave them to him as a very generous gift.
Once he regained consciousness, he started thinking. He remembered what things cost in 1954:
Average income: $3,960
Ford car: $1,548 - $2,415
Gas: $.21 per gallon
Postage stamp: $.03
American Cheese: $0.55 lb.
T-Bone steak : $0.95 lb.
Post Grape Nuts cereal - 10 .oz pkg: $0.19
Clorox Bleach - 1/2 gal.: $0.19
20 gallon gas water heater $75
Semi-automatic Kenmore washer: $154.95
One share of General Motors stock in 1954 - $9.92
One share of General Motors stock in 2008 - $9.98
Those 100 shares were a generous gift in 1954. It amounted to a third of what most people made in a year. Today, they're worth what a lot of people make in a week. Factoring in inflation, it's a mountain of loss over the decades.
It points out how shabbily the automotive industry has been run over the past 50 years. After all, it's a high-demand product and people like new cars, especially if they can afford them. It isn't so much that they've outpaced inflation, because they still cost about two-thirds of what people earn in a year, so you'd have to figure that it's bad management that has doomed companies like Chrysler, Ford and General Motors and why the Japanese have been eating our lunch for the past 25 years.
Every time I think about buying a few shares of Ford Motor (currently less than $5 a share) or GM, I lie down until the feeling passes. Meanwhile, our buy-and-hold long-term shareholders are retiring on 1954 dollars.
Jiffy Lube is hiring.