GM Update

I have written about the GM situation too many times to link to.

The starting point for my thoughts on this issue was very very simple. There will be many parts of the market and different investors impacted by the downgrades. We may have seen this start to play out today.

The domino effect was that financials were down, the Financial Sector SPDR (XLF) was down about 1.3%. The brokerage stocks were down 2.5%-3.5% today.

I have been underweight and wary of financials for a long time. I own one big bank (that had a better day than the sector), a bunch of smaller foreign banks (two did better and three lagged but all five were really just shades of gray) and one mutual fund company that did noticeably better. More importantly I own no brokerage stocks and no insurance stocks.

So far this has been right more often than not, and I have been writing this since the start of this blog. It seemed like an fairly easy assessment to make and it continues to play out. I try to make things as simple for myself as I can. This episode, so far, is just a case in point.