Should I buy GM?

FINE PRINT: What follows is a work of fiction. Any references to persons, legal entities or governments (living or dead or undead) is purely coincidental. The following is for entertainment purposes only. Any information that follows is neither a solicitation to buy or sell securities. The writer of this article may or may not own such securities at the time you are reading this article. And, don't be a complete idiot-- do your own research before you buy financial instruments of any kind.


Buying the stock:

(1) All the people who are going to own the stock after bankruptcy intend to sell it for cash. The government says it want's out. The Labor Union intends to sell the stock to pay for medical benefits. When there are more sellers than buyers a stock goes down.

(2) I heard Bob Luntz (Former Chairman of GM) on TV (2009.06.02) and he said GM will do well because the US dollar is weakening and this makes GM more competitive. When a Chairman is counting on currency for success you know this is a problem.

(3) He further indicated that the new breakeven point for GM is 10Million cars per year. Since "we" haven't been making any cars with "our" plants idled and "we" are cutting "our" product line in half and "we" are dramatically shrinking "our" dealer network; I couldn't exactly figure out how this is going to happen. He further implied that with 2million new drivers on the US roads each year; achieving breakeven was within reach. What do you think of a former Chairman focusing on breakeven rather than profitability? Emphasis mine: If you are a US taxpayer then you own GM; if you are not a US citizen but your country buys US Treasuries you are an effective owner of GM too!

(4) GM is now a referendum on Obama. Therefore this must be successful. Same with Chrysler. But not the same with Ford who didn't need mother's milk. If Ford is successful and GM is not... well, you get the picture.

(5) The Chinese are buying Hummer. Perhaps the recent visit by our Treasury secretary sealed the deal. I am sure they paid as much for Hummer as Fiat is paying for Chrysler. But I seriously doubt you will be able to find ANY reliable information on the terms of the sale or related recourse liabilities assumed by the US government (er... I mean GM corporation).


So my final anaysis is 3 sell signals; 1 buy signal; 1 neutral.

In any case, there are so many better places to put your money, why buy a car company? Did you throw money at the airlines when they were/are going bankrupt?

Should you buy a GM Car?

Yes... but only if it is a Saturn. ;-)