Bill Cara: Capital Markets & Social Equity

Bill Cara: Capital Markets & Social Equity

Bill Cara may be onto something in that Ford is selling at a very low PE ratio. The last business cycle showed us that the motors can now do well even in a climbing interest rate environment. The key is that the motors have extra large profit margins built into the price and can give some of this away in the form of zero interest loans or rebates.

In regard to the over-all economy I believe Bill is missing an important fact. Earnings momentum is not expected in the second half of an economic expansion. The rate of growth is expected to slow during this time. Just like it did from 1994 to 1999. This was a good time to own stocks even though earnings growth rates slowed.