R.I.P. General Motors (1931-2006)

[Edwin Pawlowski]

If you had $100,000 in your bank account and had the option of buying
stock in Honda, Inc. or GM--which company's stock would you choose to buy?

I do have some GM. I have no Honda. I also have a couple of oil stocks.

 

[Jason]

I do have some GM. I have no Honda. I also have a couple of oil stocks.

Has the GM stock went up or down in the past 4 months? If it has gone down,
it shows that stockholders have lost confidence in the company. I advise
you to to sell the GM stock now before it becomes a penny stock.

 

[Jeff]

Don't bet on it. GM's fourth quarter losses were $4.8 billion. It's cash
reserves are $20.5 billion plus a $15.3 billion set-aside fund for long
term
health-care costs. In three years, GM will run out money.
Source: page 26 of the May 2006 issue of Motor Trend magazine.

I don't advise you or anyone else to buy stocks in GM unless you
want to lose money.

You are making the assumption that GM will continue to lose money at the
same rate that it is losing money now.

Jeff

 

[Edwin Pawlowski]

Has the GM stock went up or down in the past 4 months? If it has gone
down,
it shows that stockholders have lost confidence in the company. I advise
you to to sell the GM stock now before it becomes a penny stock.

I bet Warren Buffet would like to have you working for him. I'll let him
know you are available.

 

[Mike Hunter]

If one follows the market they would know GMs share prices are going up, not
down. I bought shares of GM in 1960 at 40 1/8. When the share price
reached 90 1/2 it split two for one. When the share price reached 92 1/4 it
split again two for one. The current total values of those 40,000 shares is
around four times what I paid, not counting the excellent dividends GM paid
for 45 years.


mike hunt

..

 

[Mike Hunter]

I guess we can assume you do not own a business, it that is what you
believe, right?


mike hunt

 

[Mike Hunter]

That is funny. I am referring to the average new vehicle buyer in the US,
the vast majority of vehicle buyers who buy new cars, not used, and who
trade their vehicle every three or four years with 45K to 60K on the clock.
For those buyers I have said for a long time that every manufacture is
building good reliable vehicles today and the only real difference is see
among them is style and price. One not need to pay a premium price to get a
well built reliable vehicle today. The response enviably has been Toyota
buyers are willing to pay more because they believe they are MORE reliable.
They point to what Toyota buyers say about their vehicles of chose, in
various surveys. Now when I point if one believes what the people that own
the vehicles think of them, is really the most accurate 'survey,' then one
should buy what the most owners actually buy, all of a sudden somebody says
the reason is NOT reliability.

How then does one account for those of us that have owned Toyotas and now
prefer domestics for style and price?


mike hunt

 

[Mike Hunter]

That may be what you believe but it is not factual. EVERY manufacture offers
discounts to fleets and rental car companies. The current rate is around
$600 per vehicle, if you buy five or more. To rental car companies the cars
are their product, that they dispose of in a year or less. Most corporate
fleets whose vehicles, far more trucks than cars, are just one more tool
used in their business keep them in service for five years of 300K, on
average, because of federal tax deprecation laws. They
prefer domestics because they are more concerned about the overall costs of
ownership then whose name is on the hood.


mike hunt

 

[Mike Hunter]

You are confused, it is a violation of franchise law for a manufactures to
sell their vehicles to anybody but their dealers. The dealers are who sell
or lease to buyers, individuals, fleet, rental car companies who ever, the
sale must go through a dealership. All dealer, buy law, buy from their
manufacture at the same price. What difference does it make to manufacture
or dealer, who buys or leases their vehicles?


mike hunt
..

 

[Jeff]

If one follows the market they would know GMs share prices are going up,
not down. I bought shares of GM in 1960 at 40 1/8. When the share price
reached 90 1/2 it split two for one. When the share price reached 92 1/4
it split again two for one. The current total values of those 40,000
shares is around four times what I paid, not counting the excellent
dividends GM paid for 45 years.

Actually, the shares closed at 22.88, which means that your intitial
investment at 40.125 is now worth 91.52 (4 x 22.88). Which means that you
got an annual return of around 5% (the dividends) for a total return of
around 1000% (it takes about 14 years for a something that returns 5% to
double in value). Meanwhile, the SP 500 index had a return of about 1700%
plus dividends (the value of the S&P index does not include dividends). I
assumed of 5%, which is probably generous, considering that the yeild is now
4.3% and one of the highest dividend yields of any large-cap stock.

Apparently, Morningstar agrees with me:
http://news.morningstar.com/classroom2/printlesson.asp?docId=142859&CN=COM

Morningstar writes: "Though dividends would have provided some ease to the
pain, General Motors' return has been terrible. You would have been better
off if you had invested your money in a bank savings account instead of
General Motors stock."

Investing is stocks is one of the best ways to get a good long-term return
on your investment. However, GM is an exception to the rule.

I suggest you get a subscription to Money magazine and Kiplinger's magazine.
In addition, there is an excellent radio show called Sound Money
(www.soundmoney.org) which you can listen to over the internet.

Jeff

 

[Mike Hunter]

Import trucks are an 'also ran when it comes to truck sales. Ford sells
more F150s and GM sells more Silverados in a few weeks than any of the
import trucks sell in a year.

As to the Ridgeline you have to be kidding, that is not a truck. It is a
crossover vehicle like their SUV built on the same FWD car chassis. The
only reason it is classified as a 'truck' is because it has a cargo box,
like the Subaru station wagon is a 'truck' when it has a cargo box. Any
vehicle that can not even tow its own weight would hardly be considered a
'truck' to truck buyers.

mike hunt

 

[Mike Hunter]

Where in the world do you get the idea GM is loosing money for every car the
sell?


mike unt

 

[Mike Hunter]

Ever hear of the adage, Figures lie and liars figure? 5% returns? Did you
forget the years when the returns were in double digits? What did
Studebaker and Toyota do over those samee 45 years? Desides who buys only
one stock or invests in one source? I am closing on a property on the
fifteenth that a bought in 1960 for $45,000 that sold at 1.8 million,
without a broker or realtor


mike hunt

 

[Jeff]

Import trucks are an 'also ran when it comes to truck sales. Ford sells
more F150s and GM sells more Silverados in a few weeks than any of the
import trucks sell in a year.

As to the Ridgeline you have to be kidding, that is not a truck. It is a
crossover vehicle like their SUV built on the same FWD car chassis. The
only reason it is classified as a 'truck' is because it has a cargo box,
like the Subaru station wagon is a 'truck' when it has a cargo box. Any
vehicle that can not even tow its own weight would hardly be considered a
'truck' to truck buyers.

What difference does it make what kind of body and frame the Ridgeline has,
as long as it meets the needs of its costumers? Perhaps people are more
concerned with how long a truck will last and how well it works, than if it
has the type of body Mike likes.

I am not sure how your last sentence applies to the truck. The Ridgeline
weighs 4503 lbs and can tow 5000 lbs.

Jeff

 

[Jason]

If one follows the market they would know GMs share prices are going up, not
down. I bought shares of GM in 1960 at 40 1/8. When the share price
reached 90 1/2 it split two for one. When the share price reached 92 1/4 it
split again two for one. The current total values of those 40,000 shares is
around four times what I paid, not counting the excellent dividends GM paid
for 45 years.


mike hunt

Mike,
I advise you to sell your stock now while it still has value. If you hang
on to it for the next 4 years, the stocks will become penny stocks. If you
do not believe me, buy all of the stock related magazines and read what
the experts have to say about GM stock. Also, buy the May 2006 issue of
Motor Trend magazine and read page 26. I will quote the last sentence from
the article:
"In three years, GM will run out of money..."

I have read the same thing in other car magazines. Thousands of other
people have read those same articles and you know that many of those
people that read those articles will be selling their GM stock ASAP.
Jason

 

[Jason]

You are making the assumption that GM will continue to lose money at the
same rate that it is losing money now.

Jeff

Jeff,
That is only partly true. The editors of Motor Trend magazine believe that
GM will be out of money within three years. It's possible that GM will
make the necessary changes to stay in business for more than three years.
For example, they could close at lots of factories and stop making the
models that are not selling well. The editors of Motor Trend magazine
believe that GM could stay in business longer than three years if they
sell more cars.
I agree with the editors of Motor Trend magazine. If I owned stock in GM,
I would sell it ASAP.
Jason

 

[Jason]

Import trucks are an 'also ran when it comes to truck sales. Ford sells
more F150s and GM sells more Silverados in a few weeks than any of the
import trucks sell in a year.

As to the Ridgeline you have to be kidding, that is not a truck. It is a
crossover vehicle like their SUV built on the same FWD car chassis. The
only reason it is classified as a 'truck' is because it has a cargo box,
like the Subaru station wagon is a 'truck' when it has a cargo box. Any
vehicle that can not even tow its own weight would hardly be considered a
'truck' to truck buyers.

mike hunt



\

Mike,
I've seen trucks in parking lots made by GM and Ford that look similar to
the Ridgeline. Are they trucks?
I agree that GM and Ford does a very good job in regard to their full
sized pickups. I have a neighbor that owns a full sized GM truck and he
loves it.
He told me that he has not had any mechanical problems with it.
I only wish that GM and Ford would start making cars and mini vans that
had as much reliability and quality as their full sized pickups.
Jason

 

[Jeff]

Ever hear of the adage, Figures lie and liars figure? 5% returns? Did
you forget the years when the returns were in double digits?

The returns are not in until you get the check. So the appropriate values
are the price when you bought the stock and value now. And, now value is
only 125% above what you paid for it, not good for a 45-year investment.

No, I didn't forget about the years with double digit returns. Or the years
with negative returns. And neither did Morningstar in their article.

Overall, the return on the money invested in GM was a lot worse than the
return on the money invested in Ford or IBM.

What did Studebaker and Toyota do over those samee 45 years?

Toyota's figures are available only for the last 14 years. In those fourteen
years, Toyota's stock went up over 200%, while GM's went down.

Desides who buys only one stock or invests in one source? I am closing
on a property on the fifteenth that a bought in 1960 for $45,000 that sold
at 1.8 million, without a broker or realtor

Be grateful that you didn't invest that $45,000 in GM, as well.

You claimed that you had "excellent dividends." Your overall return,
including dividends was rather lousy. That's the part that counts.

Jeff

 

[Jeff]

Mike,
I advise you to sell your stock now while it still has value. If you hang
on to it for the next 4 years, the stocks will become penny stocks. If you
do not believe me, buy all of the stock related magazines and read what
the experts have to say about GM stock. Also, buy the May 2006 issue of
Motor Trend magazine and read page 26. I will quote the last sentence from
the article:
"In three years, GM will run out of money..."

I have read the same thing in other car magazines. Thousands of other
people have read those same articles and you know that many of those
people that read those articles will be selling their GM stock ASAP.
Jason

Look on the bright side, Jason. Mike can use the capital losses to offset
the capital gains he makes on property.

For me, I don't think that GM will run out of money. I think they will
become profitable again. However, I think there are better investments.

If Mike doesn't, that's his problem.

Jeff

 

[Mike Hunter]

Millions of buyers must be concerned with how long a truck will last and how
well it works, because the F150 has been the best selling vehicle for 29
years. Like I said the Ridgeline is not much of a truck, an F150 will
tow twice as much, 10,000 LB.


mike hunt