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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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From: MoneyPenny11/29/2008 7:26:12 AM
   of 110194
 
Thoughts on GM from the FAX board on IV:

Re: The movement of the markets. . .
In most cases company financials only change every quarter, it their neurotic shareholders that think they change by the nano-second. If you focus on the firms underlying numbers the blips and dips generally have little to do with anything. The big 3 auto equity is vastly negative and buying and selling it is purely gambling as it has no intrinsic value.

GM has a $62b NEGATIVE net worth and growing fast. In its BEST year (thanks to GMAC) it earned $6b. In other better years it was far less. IF you bought GM common it would have to stop losing money instantly, make its best money it ever made for 10 years in a row and only THEN would it have an intrinsic value. "Investing" in GM? It is lottery investing at best. It was an incredibly irresponsible company.

So now comes the massive downgrade of the taxpayers balance sheet all because greedy mortgage lenders didn't want the party to end and Congress changed the rules to allow to continue. How can it be in the 1990 it "was going to be the end of foolish home lending" to 2004 which was the most foolish lending period to ever exist? We have shown that this is not the end to move forward but the beginning of the end.

I still do not regret backing this $700b bailout package. We needed to stop a total meltdown and anyone that says otherwise doesn't understand our financial system. But we MUST unwind this monster of Gov't guarantees when things settle down. But unfortunately like a parent spoiling their child it is easier to say yes than no and our past has shown we will never unwind what was started.

investorvillage.com

BTW, this is an excellent board, whether you are invested in FAX or not. In fact, I'll often write about FAX and mark the post (OT). Many civilized professional investors there. MP
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