Posted on 05/30/2009 6:05:26 AM PDT by CommieCutter
I know GM is an easy target these days, but .75 cents a share?
Would it be unwise to invest 500 dollars?
It is difficult to know.
A while ago, I watched Ford and GE for a while.
Ford hit a low of 1.70 in early March. It is now over 5.50.
GE hit a low of 6.66 in early March and has rebounded to 13.48.
I don't usually give financial advice anonymously (after all who but a fool would take it). But I will make an exception in this case.
So here is an alternative to your proposed long position on GM common shares that offers a much better risk/return ratio:
Hope this helps.
The shareholders are most certainly about to get wiped out. However and by definition, any stock is worth what someone is willing to bid for the shares. Right this minute, GM shares are worth $0.75 (temporarily), and that number is very distinctly not zero, no matter how many times you care to capitalise the word.
You need to lose the notion that shareholders are unsecured debt holders; this is simply false-to-fact, no matter what those dildoes you listen to say to the contrary. Shareholders have no claim on company assets when liabilities exceed assets, period, stop, end.
Better off buying lotto
Invest the price of a Mickey D’s lunch and buy a tricked out PS3 with the rest. That way you’re only out $5 and can play video games and Blu rays in the end. It’ll hold more value, too.
yes, They are going bankrupt on Monday. Shareholders will get ZERO. Save your money.
I was thinking along those lines also.
The gurus have spoken.
GM is bankrupt and the shares worthless...unless the government gives shareholders warrants/options to buy discounted shares of the NewGM.
Which is to say, you are paying $0.75 per share for an unknown amount of *potential* future warrants or stock options.
Very risky. Very low chance of breaking even.
Please read this at CNBC regarding the potential value of the bonds to understand the reason the private equity bondholders agreed to the sweetened deal:
http://www.cnbc.com/id/31014489
“My question all along is who is going to buy a car from Gummint Motors when they start rolling off the line?”
I ask myself the same question with the idea of not imposing my own prejudices upon the issue. IOW, not me. But that doesn’t mean others won’t.
It’s certainly likely that GM cars post-BK will have one or more of the following buyer’s incentives, some/most of them stupid/perverse, but if there are enough of them, then there are some who will vote their pocketbooks versus their ideologies. Remember, GM as a government boondoggle and a thinly veiled pension and make-work system will be a company that doesn’t have to make a dime. You can already get some of these incentives on some car purchases, it’s just a matter of gathering enough of them and people will buy a Trabant or a Yugo.
1: possible tax credits/rebates
2: possible (green) tax credits for trading in your old clunker
3: guaranteed trade-in value (say, on a sliding scale, owning the car & trading it in 1 year old costs $1500 off the price of a new one, 2 years old, $3K off the price of a new one, 3 years old $4.5K off a new one)
4: Automatic payment moratorium if you lose your job
5: guaranteed loaner in the case of repair requiring multi-days in the shop. Pick you up/tow your car to the repairing dealer.
6: impressive P&L guarantee (witness Hyundai)
7: how about making it a condition of mortgage relief that you move your loan to GMAC and buy one of their cars? Is that sick or what?
Without saying any or all of this will or won’t happen, all I am saying is that the incentives could be made quite irresistable to a class of beginning car buyers, you know, young 0bama voter types, and hyped as “rebuilding Americas’s brand”. The folks who voted for 0bama want to be told what to do. This is that.
If the company’s purpose is to essentially bribe a low-income class of working or wish-they-were-working people during a prolonged recession/depression, think about the “branding”:
Whenever you/we talk about FDR, the people who lived through that era worshipped him like a god/father figure. They went to school on the GI Bill, they workd for the WPA and CCC when those were the only jobs available. He talked “hope” and etc; etc; etc; you will never get them to admit that it all flopped quite undecisively around economy-wise until WW2. You rarely hear folks talking about “what was good for the country” before they divert into “I had work when there was no other work around”, or “there was no other way I could have gone to college, and become an engineer, and neither you nor I would be sitting in this nice house today if that hadn’t happened, so be careful what you criticize”.
So, big picture wise, I foresee the possibility of GM being used in exactly this way. Create a class of voters among the young low-income and unemployed who can drive green cars, at government (public) expense, get the free medical care they deserve, got to college at public expense, and take part in rebuilding a greener and more diverse America. Go ahead and vomit all you want, hordes of folks will buy this picture, IMO. It will be “cool” to drive the same Volkscar around as millions of other folks do, it won’t be like wanting to own something special like you or I would probably want to do. From the communist standpoint, it would be probably the most portable, easily imposable method of suppressing originality and individuality, maybe right up there with univ. medical care. Get my drift?
Only a small fraction agreed. GM said 90 % must agree for the deal to go through. The piece in question says 67%. Only around 25 to 30 % have caved.
GM will not be able to pull out the deal and will file bankruptcy. The article says the bond holders will get a worse deal in bankruptcy. That is not so unless the court disregards the law. If that happens, there will be appeals all the way to the supreme court unless the bankruptcy judge comes up with a much more reasonable deal somewhere along the way.
With no drilling....We are at their mercy...And nothing changes except the pump price...
Would it be unwise to invest 500 dollars?
If you want to gamble 500 dollars, keep the radio on
Monday morning and listen for any news saying GM has
decided not to file. Be ready to tell your broker
what you want in a hurry.
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