Morningstar Advisor - August/September 2012 - (Page 32)

Sector Rap Autos on Comeback Track By Philip Guziec Detroit is leaner and greener and ready to meet the pent-up demand of consumers driving aging gas guzzlers. Morningstar’s equity analysts think that auto stocks are poised for their long-awaited rebound and that now is a good time for investors to start easing their way in. The industry is certainly still full of risks, but we think that patient investors should be amply rewarded. To learn more about an industry that hit rockbottom in 2008 and 2009, I sat down with analysts David Whiston and Richard Hilgert. Our discussion took place June 4. Philip Guziec: Let’s talk about the drama over the past decade in the U.S. auto industry to set the stage for where we’re at now and where the opportunities might be. David Whiston: Readers who have followed Guziec: So, up until 2007-08, we were selling a ton of cars, but the domestic manufacturers weren’t making any money. the U.S. auto industry may recall that right after 9/11, GM GM announced its Keep America Rolling promotion. The company threw a ton of incentives into the market and gave everyone employee pricing, escalating a price war that was already under way. U.S. new light-vehicle sales peaked at about 17.3 million in the early 2000s, and we rode that 17 million-plus until things started to slow down in 2007 and ’08. Whiston: Very little. Then housing slowed. People couldn’t use their homes as an ATM machine anymore or buy that Ford F150 as a personal vehicle to take the family to the movies. But the real spark that started the fire was when gas prices went through the roof. In real dollars, gas prices peaked at $4.27 in June 2008. Guziec: At the same time a recession started. 32 Morningstar Advisor August/September 2012

Table of Contents for the Digital Edition of Morningstar Advisor - August/September 2012

Morningstar Advisor - August/September 2012
Letter From the Editor
How Much of the Behavior Gap Is Your Fault?
What’s Your View of the Muni-Bond Market?
A Balanced Life
How to Get to Know EMMA
A Strong, Robust Fund Business
Dividend Investing Abroad
Four Picks for the Present
Investment Briefs
Fund Expenses Through the Decades
Autos on Comeback Track
Lessons From the Muni-Bond Rebound
Municipal-Bond Landscape Shifts
Municipal Bonds 101
A Tale of Two Cities
Unraveling the Mysteries of Money
Small Companies Mean the World to Him
The Chinese Art Market and the Origin of Bubbles
The Myth of the Dumb Investor
Stocks That Can Stand the Heat
Our Favorite Mutual Funds
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
The War on Savers

Morningstar Advisor - August/September 2012