We probably all remember where we were when we first heard a Michael Jackson song. The man, the legend, has undoubtedly changed some aspects of our lives. The moon walk, the video games, the CDs, the videos, he will be missed.
I’ll never forget the moment he jumped on stage at the Dangerous world tour and stood motionless, thank you for all the amazing music and entertainment.
“GM stock is expected to be worthless,” said Tom Wilkinson, director of GM News Relations. “We are not sure why anyone is still buying it.”
Now even people at GM are echoning what I’ve been saying for weeks. GM shares will soon be worthless, yet has been going up by 20% daily for the past few days. Short covering? manipulation by put writers? pure pump and dump daytrading speculation?
Whatever it is, my advice is to stay away. Good luck for those long GMGMQ.
The corporate laws of the United States is so complex such that few understand what happens when a company goes chapter 11. Working in a brokerage firm, when a company announces its bankruptcy, we notice that there are always buyers, hoping to get a piece of the new company by buying the old company’s shares. Do NOT do this! The old shares will be canceled, and you will NOT get new shares in return. http://www.sec.gov/investor/pubs/bankrupt.htm
In this case of GM, I suppose Obama is partly to blame. Despite GM being kicked off the Dow and delisted from NYSE, you constantly hear in the media that Obama states: “through sacrifices, GM will be saved“. What investors need to understand is, GM as a brand will be saved, GM as an entity will re-emerge as a privately held comporation (owned by taxpayers, ironic, huh?), and new GM shares will be issued. Old-GM, which is in billions of debt, will have its assets sold to debt holders, employee retirement funds, unpaid bills, etc. Common stock holders usually NEVER get anything. In most cases, the bankruptcy court will simply declare the stock worthless.
If you do own GM, now might be a good time to sell, which the less informed still cling onto the hope that they get something of new GM. These people are keeping the stock at inflated prices. Now that GM is off the Dow and SP500, many institutional investors will be forced to sell their GM assets, so this price might be gone in days.
Finally, a quick disclaimers. I own puts of GM for July. So I want GM to go to $0. However I am also stating this based on experience. I made a bad bet last year, and lost everything when Lehman went bankrupt.
