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their backs are against the wall. Look at the automakers that the deals that's that the unions have proposed to the automakers. I saw an analysis of Ford where Ford would go if you just did a pro fora and went back the last couple years they would have gone from like you know $30 billion of profits to minus7 billion of losses.
So that's a 47 billion swing in the Ford P&L. that at the same time that the auto companies are facing what you'd expect to be reduced demand because no one can afford a car payment at these higher interest rates, the unions are going on strike demanding Oh, I think this is existent higher wages for a 4-day work week.
Their backs are against the wall. Look at the automakers that the deals that's that the unions have proposed to the automakers. I saw an an analysis of Ford where Ford would go if you just did a proform and went back the last couple years they would have gone from like you know 30 billion of profits to minus7 billion of losses so that's a $47 billion swing in the Ford P&L only way they overcome that is with more expensive cars which Jason to your point means that those cars are not going to get sold.
Do you think that you're going to just have a little bit of belt tightening in the in the consumer? I think this is interesting. And I think, you know, Tamath, you're right that at the same time that the auto companies are facing what you'd expect to be reduced demand because no one can afford a car payment at these higher interest rates, the unions are going on strike demanding
Oh, I think this is existent% higher wages for a 4-day work week. How does this 4day work week that the the labor deal is an existential risk to the unionized auto industry in America? And I'm not opining on whether this deal should or should not happen. I'm just making an observation. If the deal as announced happens and you sensitize Stalantis, GM, and Ford's P&L to these new terms and then you compare that against non unionized, highly automated organizations like Tesla and Rivian, it's going to be very difficult for the established auto industry to survive.
And then if you'd layer on top of it 7 8 9% consumer lending rates for new cars, forget about it. And yet the Fed forecast at the same meeting they were being hawkish about rates. They also said that they were expecting unemployment next year to be 4.1% down from their previous expectation of 4.5%. And they forecasted economic growth would be higher.
So, I just don't understand how these counterveailing forces aren't going to create so much stress in the economy that something breaks. And these uh idiot unions, honestly, their timing is so dumb. Whether it's the ones uh you know, in Hollywood or this car strike, while they're shutting down, it's great for Tesla.
I mean, it's giving Tesla the entire US auto market. Yeah, Tesla is lowering the price. When I bought my Model Y long range, I think I paid 72 for it. The old price on this chart says 66. That car is now 53. That's down 20%. A $13,000 saves. The Model Y Long Range, I think, is the greatest vehicle ever made.
I paid 57, I think, for my Model Y long range. Uh-huh. Uh oh, no, no, I think I Sorry. I paid 57. I paid this price for the Model Y performance. Uhhuh. The best car. And yeah, that'll be a $40,000 car in the next 3 years. Well, you know, and I looked at it and I Speaking of austerity measures, I I was like, I have a Model X.
Do I get another Model X? I think I'll just go with the Model Y because the Model X is I don't know 50% more and I I just prefer the Model Y. I think I think this labor deal is going to put tremendous pressure on these established auto OEMs. Thank you, Captain Obvious. China is now the world's largest exporter from what I understand that just happened.
They work, I looked it up, 58 to 64 hours a week factory workers. The US factory workers want to work 32 hours a week. They want a 4-day work week. I mean, I I don't understand the timing of these unions. I mean, they they're just going to move these factories to Mexico or I think it's reasonable for the unions to ask for as much as possible on behalf of their members.
That's like obvious and good because meaning if you're collecting fees from those folks and you're doing a good job on their behalf, your job is to ask for as much as possible. I get that. Where I see the breakdown is that it just doesn't seem like there's enough numerousy between them and the companies that they're negotiating against to really sit down and look at what the impact of this is because you may get a short-term labor deal that you can celebrate, but it may actually destroy that union member's pension.
Yes, it may destroy the company. And this is my concern is that then that has to get bailed up by by the US taxpayer. And once it happens in one industry, it's going to be very difficult to actually not do it in in other industries. And the thing that needs to be understood is the risk that it puts on those kinds of tail outcomes.
And I think that that's not well discussed. Nobody in the media is really talking about it. They make it a a moral issue of like what is the CEO pay versus what is the ratio and yeah sure look that's an important issue at some level. But if you for example like you have US senators blathering on about how they'll wear a suit and not look like a homeless bum if this deal happens and that and it's like well that's not what you should be saying.
What you should be saying is my team has done a financial analysis and here's what it shows. One of the best ways to handle a market crash is to stay focused on the long term and be open to making changes and corrections if needed in the short term. And with the market in a jittery mood thanks to the ongoing inflation, the interest rate hike mania and geopolitical instability, nobody can blame the investors who are vining their hands anxiously in anticipation of a potential market crash.
And thankfully the chances of a crash happening are too difficult to determine with any certainity. So it does not make much sense to worry about it at any particular time. And that probably might not be very assuring but but the one silver lining in all of this is we have no control over when the stock market can crash or when the stock market crash can happen.
What we can only do is react in ways when a stock market crash can happen. So we can prepare in the ways we're going to react if and when the stock market happens and how it happens. But what will be reassuring is if you have a plan for what to do and what not to do in the event of a crash. Um, so for now, let's work on three things you definitely shouldn't do if there is chaos in the stock market.
The most important thing not to do is to sell your stocks in a panic. The first and the most important thing you should never do if the market crashes is to sell all of your stocks to try to avoid experiencing any further losses. Now if suddenly your portfolio is down 15 20% and people start people start to get anxious and they just want to get out of this mess and one of the worst things you you you could do it is to sell all your stocks in a panic.
The problem with panic selling is that it feels like it's the right move and after all if you can cut your losses fast enough the market's downward move to the tune of 30% might only lead to losses of 10% for you. Selling eases the sense of anxiety you have about your lack of control over the situation over the situation and your fear of losing money and and if you hear from your friends or relatives about how much they got whacked by holding on to their shares you might even give yourself a pat on the back but you'll probably end up missing out on the rebound afterwards and in many cases in most cases till now that means that you'll make less money than if you if you would have simply stayed the course.
I know that even if history is the guide to hold on to the stocks when they're going down because eventually they'll go up. There's no guarantee that every stock that goes down will go up with time. So that doesn't mean that you should just hold on to it. But I think it's wise to play it smart and even if you get out of your position, I think it's very important to just watch the stock and if it goes down much further, maybe it could become a massive opportunity.
Like if you still feel like the company is worth it irrespective of the stock price, I think buying that stock when it's down 30% might could be the best move you could make in a stock market crash. Now this is one of the most common way people profit from a stock market crash. When you do begin your journey of investing, everyone sets and has a fundamental rules which they all promise that we will follow.
Not everyone follows the people who follow to become the best investors. But even the rules and the fundamentals you set have to change from time to time because the atmosphere in the financial market is shifting regularly and you don't have to dramatically change your investing strategy without good reason in a stock market crash.
In keeping with the above, the second thing that you should not do if a stock market crashes is to switch up your entire game plan for investing without nodling onto it for a good while. It is a fact of life that crashes are often precipitated by economic or global event by economic or global events and in reality most of the stock market crash have nothing to do with the stocks or the company and nonetheless if you have a properly diversified port all of your stocks genuinely vulnerable to further declines all at once and that means any changes to your approach should be at the margin even after the crash for example let's say before the pandemic you held AMC entertainment which is down 10% for exposure to the entertainment industry because no one everyone were in lockdown and there were no times for shooting and the market's collapse in March was caused by fears of the pandemic and AMC's share price was hit plenty hard and as an intelligent and far-sighted investor you held on to the shares of the time but doing your quarterly assessment of your positions you decide that movie theaters are not probably going to making a strong comeback for as long as the pandemic is still going on and you opt to sell your shares and it's so far so good it's important to make adjustments your strategies when new information makes your original investment irrelevant.
And the final thing which the investor should never do if the market crashes is to stay on the sidelines and and wait for things to settle down. Instead, they should take action to buy while shares are cheaper than normal while shares are cheaper than normal. And that's especially true if you plan to dollar cost average to build up your positions.
And for those who have a lot of capital saved up, sharp and panicdriven downturns are usually opportunities to shore up your holdings with deeply discounted shares. Once again, assuming that your original investing thesis about why the company is worth buying still valid. But if you do decide to sit on the sidelines during a crash or correction, you won't be actively harming your portfolio's value, but you'll likely be missing out on growth.
And and for people like me and you, missing out on growth usually means it mentally feels that your portfolio is down. It's not where it should be. It's frightening to buy more shares of a stock when it's down and when it seems like the sky is falling. But famous investors like Warren Buffett, they do it.
They bet high when everyone bet lows and most of the time it has paid off. And for companies that pay a dividend, buying rather than idling means that you'll be securing shares with higher dividend yield that you could not that you could normally get. So you'll get paid for your smart decision to take a a hard bargain for years down the line.
Let's say a company's worth buying at $500 a share and it has been there and it has been worth buying for $500 a share for the past 2 to 3 years and suddenly if the stock goes down to 250, it is actually worth more than buying. I and I think that's what it means to not stay on the sidelines and to cash
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