GM Stock is now trading at $1.00, buy or not

In a few months GM factories will dismantled for scrap metal and shipped to China to be separation into individual commodities. Your $1 shares will be as worthess as tits on a bull.

some say the bondholders will get 10 cents on the dollar - the rest in stock.

Will there be a GM 10yrs from now? Yes....

Will the CURRENT equity holders get anything out of it? No...

The equity is gone. All derivative prices (options, single stock futures) point to <$0.30 by fall.

If you want to participate in the new and improved GM, buy senior bonds.

USAF_run wrote:

Good or bad investment idea?

Worse than bad. GM will likely go into bankruptcy and the current common stock will get wiped out, gone, worthless. If they do survive without the bankruptcy, Obama will make them build cars nobody wants anyway.

Trust me I've made this mistake before and it was expensive tuition for my schooling. I pass this lesson to you for free.

There are many good, young and growing companies to invest in. That is what you want, not a dinosaur like GM.

Get yourself a subscription to IBD and read it for a few months along with the book(s) you will get with it. Then you will understand.

I'm pretty sure if GM goes into bankrupcy the common stock holders are wiped out. At a $1 it might be a good day trade but right now as a long term hold it makes no sense. If/when you hear some news that the company can somehow avoid bankrupcy and its still around $1 drop a grand or two you don't need on it. But right now with so much uncertaintly I would stay away from holding it long term.

not

S&P 500 index fund ETF or oil ETF.

The time for dabbling in GM stock is past. I considered it a few months ago when it was down in the $1-2 range, but never pulled the trigger. Ultimately didn't want to buy a dying company on the slim hope that it somehow recovers. Bankruptcy or the equivalent now looks inevitable.

K-mart was the same way a few years ago. Slipped below $1. They reorganized and the bankrupcy court allowed them to wipe out shareholders and start over and issue new stock. (Yes, the equivalent of stealing from the shareholders) GM will do the same thing.

But if you voted for Obama, should should have faith that he won't let this happen, I mean, the US government is a stockholder in this company.

Bad BO wrote:

K-mart was the same way a few years ago. Slipped below $1. They reorganized and the bankrupcy court allowed them to wipe out shareholders and start over and issue new stock. (Yes, the equivalent of stealing from the shareholders) GM will do the same thing.

stealing from the shareholders? How does that work?

Last time I checked, equity was at the BOTTOM of the liabilities column i.e. they get anything that is left over, and are the first to lose out. That is what equity is - residual interest and limited liability.

EOG - the assets of Enron. Who had claim to those assets? The bondholders. The equity got dick, as they should have.

Merton - Equity is a call option on the bonds of the company, and the equity holders have the right to put the company back to the bondholders.

USAF_run wrote:

As of Friday, General Motors stock reached $1.00 for the first time in a LONG time. Is now a good time to get into GM stock? Does anyone think there's a real chance that this stock tanks and goes to 0.00? I personally just can't see GM stock trading at less than $1.00 5-10 years from now, and honestly think it could get significantly higher. I've got 2k worth of money sitting on the sidelines and would like to maybe buy 2,000 shares of GM stock. Good or bad investment idea?

*Disclaimer for Flagpole(I'm already diversified into 3 separate mutual funds, have my Roth IRA maxed out each year, and have Zero debt to pay off.)

Zero debt (assuming this means the house too?) and maxing out the Roth IRA is a good start. Are you contributing to a 401k or other retirement account too? The Roth IRA only allows for $5,000 a year, so that's not a ton going into that if that's all you're doing. When you say "3 separate mutual funds" do you just mean within the Roth or separate from the Roth?

My preference before dabbling in individual stocks would be no debt at all including the house, 15% or more into retirement accounts which is ongoing, THEN buy individual stocks, and when doing so, you should have no fewer than 5 at a time, and they should all be (20% max in each sector) in different sectors of the market. Almost no matter how you answer though, $2,000 isn't a TON of money, so if you are comfortable potentially losing $2,000, then go ahead and go for it. I wouldn't do it though, but I'm extra cautious and use the advice of many who do this for a living -- my advice above about being in separate sectors and owning no fewer than 5 stocks and being in retirement accounts first...that all comes from Jim Cramer, and I think he's right on about this. He also advises that you spend an hour per week per stock in research on that stock.

We have lost American car companies before. Remember American Motors? Don't think it couldn't happen. If you buy and it goes way up, you just got really really luck. Buying ONE stock goes against pretty much what any financial adviser would say to do.

USAF_run wrote:

I personally just can't see GM stock trading at less than $1.00 5-10 years from now, and honestly think it could get significantly higher.

I thought the same thing about WAMU late last year when their share price dropped to nearly nothing. Lost $600.

If you want to get into the auto industry, buy Ford.

Buy 100 shares for a buck. Ask your broker to send you the actual stock certificate. If GM files for bankruptcy, put the certificate in a cheapo frame and sell it on Ebay. You probably will at least get your money back.

GM is a sinking ship. GM is worth $0.01 in reality. Don't invest in sinking ships like GM, war in Iraq & Afghanistan. Those are all lost causes.

I am going to buy 10,000 shares. It is enough money to show support but not so much that you can't afford to lose it.

The show of support is worth 10 grand to me. So no matter what happens it will be money well spent.

Flagpole: I rent(350 a month), don't own, so no Mortgage for me. I have 3 Mutual Funds, 1 is my Roth IRA, one is for my House Fund, the other is for a new car fund. I'm not all that concerned about saving more for retirement over and above the Roth IRA becuase after 20 years in the Air Force, I get 50% of my pay for the rest of my life. Every year in after 20 I stay in, I get an additional 2.5% of my pay back(up to 30 years or 75%). So retire as a Lt. Col or Col. in 20-30 years from now can make one set for quite a long time(A current Col. with 25 years service makes about 130k). I can essentially retire at age 42 and not be too worried about income for the rest of my life.

Now that I've realized GM is not a good buy, Ford is sitting at $5.00 as well. Yeah or nay?

Day trade it. If you can get shares at $1, even selling at $1.10 is a 10% return on investment. It's going to move $.10 - $.20 a day.

Just don't get caught holding when they declare bankruptcy.

Why not take that $10,000 and buy hurdles, barriers, blocks, etc. for a local high school track near where you live ?

Off the Grid wrote:

Bad BO wrote:

K-mart was the same way a few years ago. Slipped below $1. They reorganized and the bankrupcy court allowed them to wipe out shareholders and start over and issue new stock. (Yes, the equivalent of stealing from the shareholders) GM will do the same thing.

stealing from the shareholders? How does that work?

Last time I checked, equity was at the BOTTOM of the liabilities column i.e. they get anything that is left over, and are the first to lose out. That is what equity is - residual interest and limited liability.

EOG - the assets of Enron. Who had claim to those assets? The bondholders. The equity got dick, as they should have.

Merton - Equity is a call option on the bonds of the company, and the equity holders have the right to put the company back to the bondholders.

That's how it should have worked. But it didn't. K-mart was allowed to clear its lease agreements and abandon common stockholders. The corporation restructured, reissued stock, and stayed open without liquidating anything. Just a year after reissuing stock, the company bought Sears.

Look into it before you say want you think happened. Because it didn't. The courts can do what ever they want. And they did.

Here's how it went down.

http://74.125.95.132/search?q=cache:RsNjRJixOEwJ:www.fool.com/investing/small-cap/2005/03/28/kmart-disappears-again.aspx+k-mart+abandons+shareholders&cd=3&hl=en&ct=clnk&gl=us