November 25 2008

In general (or in PFC –private first class) we don’t consider ourselves contrarians, except in the sense that we’re muleheaded and crumudgeonly and balk when anyone, especially the media try to chivvy us around.  We know that GM is deep do-do as George the 2nd has said.  Obviously anyone who would invest in the car business at this point needs a psychiatrist, not an investment advisor.  Where once what was good for GM was good for America we are now at, is it in the best interest of the country that GM go broke.

It is astounding to think that some right wing politicians with their ideologies stuck in their craws think that the market ought to be allowed to punish GM.  On the contrary, we the public ought to punish GM. Actually, we already have, but there is never enough punishment for right wingers.  In this case some more punishment is in order, and Barak and Congress are on track to supply it.  As in, you guys get in your corporate jets, go back to Detroit and go back to the drawing board and come back when you have your stuff together with a plan that makes sense.  Oh, and by the way, drive back to Washington.  Don’t fly.

Never mind.  Just basic economic analysis above.  Even more basic analysis is Barak and Larry are not going to let GM fail.  Now here is the trading analysis.  We are not so crazy as to suggest investing in GM.  On the other hand, following our theory of trades as lottery tickets, what do you have to lose by buying a few shares (a very few, proportional to the size of your capital)?  About $3+ bucks.  If you saw a good looking horse and the public was betting his odds way up –say, 64 to 1, would you take a flyer?  BETTER than a lottery ticket. We bought Ford the other day on this reasoning (or non-reasoning).  We almost bought C on the same theory then we had to go help our youngest son get into college and got distracted.  Remember we do not recommend stocks, and if you bought this lottery ticket it would be 100% risk.  Figure out the rewards for yourself.  Remember.  You didn’t hear it here.

Technically there is a reversal day bottom here, for what it’s worth.  Good luck.