It looks as though one of Canada’s former darling stocks, Bombardier, is at risk of losing its spot on the S&P/TSX Composite Index. This headline from MSN Money: “Bombardier, Once a Canadian Champion, Risks Exile from Index” (1)
Firstly, and most importantly, remember that what I say here is not investment advice. Don’t run out and go long or short based on what I say here. I’m merely having a discussion here as this news plays into my five principles. Talk to your investment professional, who should know your financial picture, before making any investment leap. And, if you’re short of such an investment professional or your existing one isn’t cutting it, click here.
Back to Bombardier, Quebec’s darling during good times but Canada’s pimple in bad times.
How much taxpayer money has been flushed down this company? I seem to recall the Trudeau government “loaning” money to the company about three years ago. Some times it was “lending” the money, some times apparently the government was making an investment on behalf of the Canadian taxpayer. Whatever the reality, we will never know, as it’s always meant to be.
And whatever the case may be, whether the money was lent or invested, it looks rather factual that the Canadian taxpayer won’t see one nickel of that money back.
I also recall that at the time of the wealth transfer from one bankster institution to another, Bombardier was cutting thousands of jobs while simultaneously doling out pay hikes to company executives.
Sure. Makes sense if you live in Bizarro World! I’m sure it was worth patting the executives on the back while booting out lowly employees.
Now, I get it. The news is not of Bombardier’s demise. It’s merely risking being removed from an index. Not the end of the world.
But for a company whose stock has been in almost perpetual free-fall for the last 20 years, after many promises of changes, of good times ahead as long as the government, whether federal or provincial, would just pony up some extra dough, I can’t help but say it feels a tad bit rewarding to see such cronyism finally possibly being overcome by the invisible hand of the market.
This is a company whose market capitalization reached $36.2 billion in the summer of 2000. Now it hovers around the $1.4 billion. That’s a drop of 96%. To make it a touch bit easier to swallow, that’s an annually compounded loss of around 15%.
Looks like the governments really are investment experts…
Now, I know people don’t care about facts. It’s all emotion for everyone. I get it. Bombardier is a Canadian company. It was emotionally appealing to see its products soar through the skies or whisk by on the rail tracks. Emotions dictated a great investment to just push it through to more glory.
But while us taxpayers were beaming with pride and overflowing with joyful emotions, the pockets in the Bombardier board rooms were overflowing with money.
Know all this, what sort of emotion are you feeling now?
I’ll tell you that for years, my emotions when it came to Bombardier ranged from confused to distraught to just plain old “whatever”.
But it’s time to take note, put aside our national pride and start asking questions for the time when another government will step up with more money for this pork trough. If the company lasts long enough, my friends, mark my words, the government money bags will come out yet again. Will it be crickets as usual then as well?
Of course, what do I know? I'm just a Recovering Bankster