Buy American, But Not Ford and GM

Tickers in this article: TSLA F GM
NEW YORK ( TheStreet) -- Doug Kass wrote an excellent column last week for TheStreet's Real Money premium service. In "More Than Ever, Buy American ," he outlined 10 reasons why he remains bullish on U.S. equities.

While I am not quite as optimistic as Kass, I do agree that the U.S. ranks near, if not at the top, of the best places to invest in the world.

I'll state the obvious now. If you're going to buy American, proceed with caution on two of the companies that are defined as quintessentially American: Ford(F) and General Motors (GM) .

Do not expect a stable eurozone any time soon. And think twice about automakers such as Ford and GM that have significant exposure to Europe.

Of course, we received a loud and clear warning from Ford last week, via a regulatory filing .

The company announced its international loss in the second quarter would be roughly three times as much as the $190 million hit Ford's international unit took in the first quarter.

A handful of readers ridiculed me for the things I said about Ford and GM in "Ford, GM: Two Stocks I Would Not Touch With Your Money" .

For example, one commenter who goes by the handle "michmnn" responded to a comment that classified the article as "interesting":

It's only interesting in that it exposes the authors lack of knowledge about the auto industry, how does "The Street" screen these writers?

Given the way the stock market gyrates these days, I'm not one to make much of short-term moves in stocks.

That said, it's interesting to note that when that article was published, Ford shares were changing hands at $10.01 and GM shares were trading at $19.85.

In Friday's trading, Ford shares dipped as low as $9.46 and ended the day at $9.59. GM fared a bit better, rebounding from an intraday low of $19.24 to close at $19.72.

I expect further downside or, at the very least, range-bound stagnation in both names for the foreseeable future.

It's about more than Europe, though. And it's certainly not about knowledge, or lack thereof, about the auto industry. That's a big mistake. Your "knowledge about the auto industry" will not take you all that far when selecting stocks.

According to Yahoo! Finance, the one-year price target on Ford is $14.75, as of Friday's close. Most analysts consider Ford a strong buy, a buy or a hold. The stock's price-to-earnings ratio now stands at a "cheap" 2.03. For many investors, this represents the value play of a lifetime. I've been hearing this for the last year. In 2011, I even went long some F call options. Over the last 365 days, F has lost about 32%.