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Strategies & Market Trends : Value Investing
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To: James Clarke who wrote (7569)6/22/1999 4:33:00 PM
From: Freedom Fighter  Read Replies (1) of 78670
 
James,

GM does look like a very big bargain. I had several problems with it the last time I looked closely at a 10K though. (I think about a year ago)

1. Enormous post retirement liabilities that will have "hard to know" effects on true free cash flow down the line.

2. Underfunded pensions.

3. US consumption is booming almost like never before and now represents its highest percentage of US GDP ever. My guess is that with the savings rate negative, extremely high consumer debt levels,
and the fullest employment in decades, US consumption levels are very vulnerable.

I wouldn't trust the surface numbers nor the current earnings levels.

That said, on a relative basis it's still cheap. But that's because I think most blue chip prices are nutso!

Wayne
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