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Dear Mr. Berko: I own 5,000 shares of Ford at $3 a share. Because the economy looks like it鈥檚 going back to prosperity and better times, would you recommend that I buy more Ford stock? As you know, Ford recently recorded a $2.3 billion profit, so it looks like the economy is really on the road to recovery and the stock market could really take off back to, I hope, its old high of 14,500 perhaps by next year. I bought Ford because I owned Lincolns for 12 years and they are great autos and I just knew the company would survive.
G.L.
Troy, Mich.

Dear G.L.: You and millions of other patsies, along with the green-shoots idiots, the president鈥檚 gung-ho policy makers, the ignorant media and the pandering politicians are confusing the beginning of the end of the recession with an imminent robust recovery. It鈥檚 an egregious mistake to assume that just because the economy has stopped its free fall, it has turned the corner and we are on the road to recovery. That assumption is far, far, far from the truth.

However, Barack Obama鈥檚 administration continues to glad-hand the consumer, the politicos continue to pander for votes, and the media, which wouldn鈥檛 know a phlebotomist from an economist, jump on the bandwagon as everyone enthusiastically sings, 鈥淕ood times are here again.鈥� There are lots of speed bumps on the yellow brick road to recovery, and they are conveniently ignored because they don鈥檛 fit the program, because they鈥檙e politically incorrect and because the average consumer has the economic IQ of a titmouse.

The bubble in the commercial real estate market is still bursting. Vacancy signs are sprouting like green shoots, and the commercial mortgage market has turned from lust to dust. States with record deficits (California, New York, Ohio, Illinois, etc.) are competing with federal agencies for federal money, state employees are losing their jobs and state government purchasing departments are significantly reducing their 2009 and 2010 expenditures.

Many Americans are losing their unemployment benefits, which reduces spending, which reduces demand and increases the personal and business bankruptcy rate. Our trading partners 鈥� Canada, France, the United Kingdom, Japan, etc. 鈥� are importing less from us, demand is weak and their economies are also floundering. And our enormously huge national debt precariously teeters on the edge of a precipice 鈥渨aiting for Godot.鈥�

There are two classes of Americans that are not affected by the recession: the wealthy and the poor. The wealthy may lose 30 percent of their fortunes, but a drop from $300 million to $210 million won鈥檛 affect their lifestyles. The wife can still buy a sable coat, drive a Bentley, vacation on the French Riviera and slather beluga caviar. And the dirt poor already have a standard of living so low that it can鈥檛 get any worse.

But congratulations on your purchase of 5,000 shares of Ford (F-$7.66) at $3 apiece. You鈥檝e got a sweet profit, but you don鈥檛 have an exit strategy. Bernard Baruch, when asked for the secret of his stock market genius, once exclaimed, 鈥淚 sell too soon.鈥� Don鈥檛 add any more Ford common stock to your portfolio.

However, I would have zero objections if you sold 4,000 shares of your common stock and bought 1,000 shares of Ford Motor capital trust 11, 6.5 percent, cumulative, convertible trust certificates (F-S-$29.25) that pay a lovely $3.25 dividend with an 11.1-percent current return. This convertible preferred has $50 par value, matures on Nov. 15, 2032, and is convertible any time into 2.83 shares of Ford common stock. It鈥檚 a piece of junk, but if Ford survives, that junk can turn into treasure.

Address your financial questions to Malcolm Berko, c/o The Daily Journal of Commerce, P.O. Box 8303, Largo, FL 33775, or e-mail him at [email protected]. 漏 2009 Creators.com