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Why is GM going through the roof? Haven't they been talking about bankruptcy. Shouldn't their stock go down?
Answers
678 points
BoxCar answered 6 months ago …
There are some of us from MO (the show me state) who learn by doing, so how better to learn about GM going thru bankruptcy than to buy 100 shares at $1? I did
Already I've recv'd an email from my Scottrade account that GM stock is part of a
"non-mandatory reorganization or tender offer which expires on 6/3/09" and that I
must notify Scottrade by 10am of expiration date if I want to participate for $25 fee.
Now if I'd never owned GM, I wouldn't learn anything about these activities would I?
2082 points
alanj answered 6 months ago …
We are currently in a bear market rally right now for the overall market. Which means people are buying, which pushes the stock market up. Big companies such as GM tend to follow along with the market. GM has been talking about chapter 11 bankruptcy not chapter 7. As a result people feel that this company is going to exist in the future. Maybe as a smaller company or someone might buy it. It's not going to just close, as would happen in a chapter 7 bankruptcy. And in comparison to what the stock was before our economic turn down and what it is now people think it's a good buy. But, I wouldn't buy stock right now as the market in general has reached a resistance level that it is having a hard time breaking through. It is very close to an overbought condition. It is primed for a trend direction change. I anticipate a continuation of the bear market slide very soon, if it hasn't already started. If the market has changed direction and continues down GM stock should do likewise. This might be a good time to buy some GM put options with about a 6 month or more expiration date.
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jrj90620 answered 6 months ago …
I've heard a couple explanations.One is that speculators are buying shares like lottery tickets.The same idiots that will take poor odds for the chance of a big score.The other is that shares to short are hard to come by so they have to pay up to get them.Either way,I don't think this will end well for shareholders.By the way.There is the famous old phase,"As GM goes,so goes the economy/stock market".From my observations the U.S. and GM both peaked at about the same year,1970.Both have been in secular decline since.
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