GM

Does anyone else see this as a disgusting bargain?

Obama did say afterall that the collapse of the auto industry "is not an option", and if the bailout goes through their would potentially be heavy restructuring. Perhaps this bailout money will be put towards restructuring a more hybrid if not completely biofuel charged line of automobiles?

Thoughts? Q3 last year prices were around 50$. They're around 4$ right now...you do the math if there's a rebound. And if there's not, you don't lose much at those prices.

As well, I just don't see the bailout NOT happening. Think about the consequences: unemployment, potential and likely depression, and all those assets would just be bought up by foreign capital (most likely from other auto makers like Honda, etc who here in Canada are NOT shutting down plants like GM plans to)

Suprised I havn't seen anything about this on here...

Also: Please only post if you have researched input into this discussion. No keyboard jockies, or repeat orators of "experts" off of CNN. Homegrown opinions only.

The only real reason for a bailout is for the "moral" factor. They want to be able to say they did something to help, regardless of if GM actually becomes a viable company or not. There are too man issues involved that will derail any actual turn around such as Gettlefinger and his gang of thieves, or Wagoner et all's limp wristed management abilities (as they are the ones who turned the other way and let Gettlefinger get away with what he has). Regardless, I imagine they'll get their money one way or another just so those republicrats in washington can say they did something just so they can try and hide from their ineptitude as the rest of us see it.

Just don't expect a rebound in stock price because of the word bailout. Look at what happened at Freddie and Fannie. From reading articles, it looks like the government is looking at giving loans in return for warrants worth up to 20% of the loan's value. So even if we assume a minimal loan of 15bil to GM, that's still 3bil of warrants the gov has...which is equal to the current market value of GM. Either way, i'm betting that GM's stock will be next to worthless some time next year.

Disclaimer: i own puts.

And yes, i see a bailout happening, i just don't know what it will be. At this point, i think the average US citizen is too pissed off at the amount of money the gov is spending to justify a loan without equity sourcing. I'm pretty confident we'll see equity get diluted to hell and end up with gm shares trading around a dollar.

It's been said by everyone, but i believe it, that the US economy, perhaps the global economy, is too fragile for the big 3 to fail. Yes, they deserve to fail, but i don't believe the economy could handle such a failure in a physical or psychological sense. Don't forget about the billions of dollars they owe to banks. Default on those would cause more banking issues.

At this point, we're seeing the ripples causing ripples causing ripples...

Thing is... just because the industry gets a bailout doesn't mean the stock holders will be secure. If the company goes thru bankruptcy filings in order to clear itself of union contracts then the stock will be worth nothing. The gov't might wait until before acting.

IMHO, buying GM would be a bad investment. Many years ago, I bought 1000 shares of Planet Hollywood at .10/share thinking it was a bargain. They later filed for bankruptcy and I lost my $100. GM could easily become a penny stock. I say sell short or buy puts, or more conservatively you could do a straddle.

I say it isn’t safe, it wouldn’t be wise to do it if you use an strict money management policy but I cannot help but feeling it could be a chance to get it; with a huge risk perhaps, though I truly find it hard to believe that the automakers will collapse. Even if help from the Government does not reach them they still have bankruptcy to heal and get back to profits.

If the gov't allows them to do that, that is.

What do you mean if the government allows them to do that? Is not every company or person that has gone bankrupt entitled to file for bankruptcy?

The real low risk/high reward money was made shorting GM the last couple of years. To buy now is high risk/low reward since even if there is a turnaround it will take years if not decades.

Investors are smart to look for strong not weak companies and industries overall. Because for every company that makes a comback there are many more others that do not. And even then their money is tied up till this company returns to profitability.

That is correct. The fact that a company, in this case GM, can file for bankruptcy does not guarantee that they will come back as a profitable company, not even in a longer term, though it is absolutely possible. What I wanted to express is the fact that even if they don’t get any money they will still have some choices.