$4 Gas Means New Life for Geo Metros

As a contrarian, I love this story:

The much ridiculed Geo Metro, which GM sold from 1983-1992, has suddenly become very popular - due to $4 gas.

I drove a rental Geo more than 10 years ago, and remember how cramped it was. Yet, they get excellent gas mileage.

In fact, an old Geo metro costing $1,000 gets better mileage than a much more expensive Prius.

Now, the wholesale auction prices of Geos are up 27% this year, and used car dealers are selling them like hotcakes. They can't find enough to sell, because people who still have them are hanging on to them.

In fact, I read of one person who wanted to buy a replacement for his 1980's Geo that had 344,000 miles, no air conditioning, and a broken window. All the dealers were more interested in buying his Geo than selling him another car!

This story warms my contrarian heart, because:

1. A forgotten car (Geo) that never got much respect is suddenly popular.

2. Used Geos are more in demand than new Geos were.

3. Shows how GM, instead of keeping a contrarian bet for hedging, went all out in chasing the market. They abandoned the Geo and jumped on trucks. I bet they wish they were still making them ;-)

4. The much-maligned traditional used car dealers are coming ahead. In recent years, they were overshadowed by the trends of car dealers carrying "pre-owned" cars and CarMax. But, these places keep late model used cars. Independent used car dealers were the ones who got "stuck" with old Geos, and are now cleaning up.

This situation is an example of how changing circumstances can boost the fortunes of assets that are currently low valued.

In hindsight, if you owned a used car lot or had a lot of cars, think how much money you could have made if you sold off trucks a few years ago, and invested in high mileage Geos ;-)

I used to be a trend-following trader for many years - I got stressed and never consistently made great returns. When I abandoned the "experts" and went with my instincts, and developed my contrarian stock trading system, I started making great returns with no stress.