OS follows a few stocks with interest, sometimes owning them, sometimes not, so he's not trying to pump his portfolio today, or ever. Life is too short, and he assumes his readers aren't stupid.
Sirius XM is a very cool service, in OS's humble opinion. He's considering installing it in Mrs. OS's car for Christmas, since she tends to drive around a bit for her profession. There are home and portable systems as well, but the lion's share of its business comes from car installations.
Sirius as a stock has had a perilous history, with a lot of fluctuations, a merger with XM, loads of debt, and...Howard Stern.
Brandon Matthews is the pseudonym for a financial blogger who follows Sirius. He's been screaming 'Buy, Buy, Buy!' for quite a while, and he's been right! Stock has gone 'to-the-moon-Alice' this year. Now, it's stalled, and he's questioning why.
There are are number of reasons, but it comes back to that automotive install 'thing'. And to the realities of The New Normal.
Edmunds.com wrote that subprime lending deals are “booming,” based on a report from Experian. Bear in mind that this Expedia report of “booming” lending in the subprime arena was probably released on the day that Sirius XM shares fell. Hmmm. The devil is in the details, and quite frankly the only thing “booming,” is the rate in which consumers are avoiding new car purchases.
Despite higher priced loans this year, the loan balances of financial institutions are plummeting. In the third quarter, the average loan financed increased $2500.00 over the third quarter of 2009. Yet the total outstanding automotive loan balance dropped $23 BILLION in the same period, which Edmunds describes as “another indicator consumers are not replacing existing vehicles in their households.”
He has more to say, and includes an interesting chart to illustrate.
Long story short, nothing and nobody escapes the reality of the real economy, the one that people like us out here in the heartland live in. This household is not replacing cars anytime soon, but is planning to spend about 6k next year to keep its fleet of three in good health. OS will happily write checks to JimBob The Local Mechanic, but it will be 2012 (at least) before he'll willingly make that next purchase.
Which will be a used car. In cash.
Who in their right mind, in this climate, signs a six-year note on a rapidly deflating asset like a car? Who allows a lender to hold a gun to the family's head, if it can be avoided?
OS has much much more to say, but is attempting to remain pithy.
Moh', latuh.
(N.B.: OS made some money on Sirius, but got cold feet last month and cashed out. No position currently. Read the disclaimer to your right, 'cuz OS's advice and two bucks will buy you a cup of overpriced coffee.)
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